NATSEM, an economic think-tank, has concluded that compulsory superannuation is the single most important factor in the mitigation of wealth inequality in Australia.

Universal and compulsory super – where every worker has the right to their own superannuation account – would not exist had it not been for the campaigns fought by union members in the 1960’s, 70’s and 80’s.

Here is a brief history of universal super.

Super was not always universal

In 1985 only 39% of the workforce had super. Access to super depended on age, gender, occupation, occupational status, whether you were full or part time, permanent or casual, or a contractor.

Access to super was deeply inequitable: only 24% of women had super, while 50% of men had access to super.

Higher income earners such as permanent public servants and full-time white collar private sector employees were more likely to have access to super.

Women and blue-collar workers were the least likely to have access to super.

The regulation and structure of super was considerably different. Some companies treated the super fund as a company asset and loans to companies were not uncommon.

Most funds were “defined benefit” which disadvantages people who change jobs throughout their working lives, but advantages those who stay in one job for 20 or 30 years, especially those who retire on high salaries.

In the early 1980’s the ACTU developed strategies that would address Australia’s ageing population. Research demonstrated that there would be insufficient tax payers to sustainably meet the cost of pensions for retiring baby-boomers.

The response was compulsory, universal superannuation.

Unions respond

In the 1960’s and 1970’s unions began to campaign for super. The waterfront union secured super schemes for its members during the 1960’s.

The first “industry funds” of the type we see today were established in the early 1980s. The pioneer funds were developed for storemen and packers (LUCRF), building workers (BUSS) and meatworkers (MISEF).

These funds developed from industrial demands placed by unions on employers and in some cases, vigorous campaigning including strike action was required to persuade employers to agree to contribute.

ACTU Objectives in the 1980’s

The main objective of the ACTU and the unions was to achieve a universal system of compulsory super, which had the following characteristics:

• Super for all workers

Irrespective of age, gender, occupation, industry or work pattern.

• Vesting

Superannuation would belong to workers rather than employers, so that workers kept their entitlement even if they left their job before retirement.

• Portability

That when workers changed jobs they took their super benefits with them – assuming they worked within the same industry, it would be with the same super fund, thus “industry funds”. (Most industry funds are now “public offer” meaning that workers can join any industry fund regardless of the industry they work in.)

• Preservation

The purpose of super is to provide an income for retirement. Unless there are special circumstances (financial hardship and/or permanent disability) employer contributions should be preserved until retirement.

• Equal representation

Unions wanted employee as well as employer representatives to act as trustees of super funds – not just employers.

• Insurance

Unions sought insurance provisions for workers through their super fund.

• The principle of “deferred pay”

The provision of super came about through union-employer negotiations and was provided by employers in place of pay rises. Super was therefore regarded as “deferred pay” and a “right” for workers.

Read more about the Features of Industry Funds.

Key dates

1986+

In 1986, the Australian Industrial Relations Commission arbitrated on an ACTU claim that all workers covered by an Award should be provided with 3% super (that is 3% of their wage). However not all workers were covered by awards, so not all employers complied. This led to the establishment of multi-employer industry funds covering most industries, as well as some state-based funds.

1992

In 1992 the Federal Labor Government Introduced the Superannuation Guarantee (SG), following a refusal by the AIRC to increase the level of contributions under awards.

All workers had to receive a level of super during their employment, as long as they earned more than $450 a month.

Super contributions were to be increased progressively, between 1992 and 2002 from 3% to 9%.

The Liberal and National parties opposed compulsory super until 1996, when they changed their position for the election that year.

The Government has no plans to increase contribution rates although it is now widely accepted that a 12-15% super levy is necessary to achieve a basic retirement income.

Read more about How much super is adequate.

2004

Today almost 90% of workers are members of super funds. Employers contribute 9% of employees’ salary into various types of super funds.

2005

The choice of fund legislation will take effect from 1 July 2005, compelling many employers to offer their employees a choice of super fund.

Click here to read a History of Cbus Super