Is money in your pocket better today or tomorrow?

If given the choice, would you take $63 a week today, or leave it in your super for a rainy day?

The federal government is being urged to consider plans to overhaul superannuation for low income earners, providing them with the option to opt-out of compulsory superannuation. The idea stems from the notion that low income earners will never have enough super to avoid the pension in retirement. The plan, which would ultimately target part-time and casual workers on less than $37,000, would hand an additional $63 a week or $3,324 per annum to those that opt-out.

For those earning under the tax free threshold of $18,200, the plan would mean an additional $32 a week and the avoidance of the controversial $500 tax penalty, requiring some low income worker’s tax refunds to be paid directly into their super account.

For those that this plan targets, $63 or $32 a week, is enough money to make a real difference to everyday living, today.

It is argued that the superannuation system has never worked for low income earners. The benefit to their financial situation and the economy in having that money today is better that sitting in a super account for tomorrow. The government will have to make provision to provide the pension for these people in any case.

“We’ve had the kite-flying of using super to pay for your HECS debt and your mortgage. But we’ve got to put away as much as possible as we can today to get the advantages of compound interest.”

As part of a whole of superannuation system review, Treasurer Scott Morrison is considering plans to reduce superannuation tax concessions for the rich, to help fund these new plans and others targeting middle-income Australia.

But it begs the question, shouldn’t we all be saving for a rainy day?  Should we all not do our bit to save for our retirement, however big or small? Will the age pension be enough for people to live by. Many consider the current pension to be below the breadline anyway, so are we not all better off saving up whatever we can to top up the pension later in life?

It’s a hard decision. The appeal of that extra money today and what it may do for more food on the table or more bills getting paid, is hard to ignore but it does tend to push off the requirements of tomorrow for another time.

Should we support the idea of an opt-out system of superannuation for low income earners or do all Australians have an obligation to compulsorily save for their retirement?