A) What Was the Purpose of the Introduction of Compulsory

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The Answer is a) The purpose of the introduction of compulsory employee contributions to superannuation and the government's superannuation guarantee scheme was to provide a mechanism for employees to accumulate greater retirement savings from which to fund their retirement needs. As a result of greater personal retirement savings, it was expected that the reliance of the population on government supported benefits and allowances such as the age pension would be reduced.
b) Even at the current maximum funding level of 9.25% of an employee's salary (as from July 2014), it is doubtful as to whether this will be a sufficient rate of accumulation to provide a satisfactory amount of income for a person's retirement years. Studies have indicated that an accumulation rate of closer to 15% is likely to be required in order to provide for an adequate (generally accepted as being 60% of final salary) retirement income. Given the significant number of people not covered by the provisions of the superannuation guarantee scheme (including; the unemployed, low income earners and the self-employed) and the funding levels currently legislated (9% increasing to 12% of the employee's salary over a period of years), it is likely that a significant percentage of the population will still require some government financial support. With the rapid ageing of the population, this will continue to place significant financial pressure on government. In an effort to otherwise increase the level of superannuation savings (other than placing the burden on employers) the government has introduced measures such as the spouse contribution, co-contribution, and reduced the tax on withdrawals of funds on retirement.

A) What Was the Purpose of the Introduction of Compulsory

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