Vision Super has launched an innovative program designed to help workers save more for retirement, starting off at Mount Alexander Shire Council. The Save More Later program is based on hyperbolic discounting, a behavioural economics concepts that suggests people value their current self more than their future self. This concept means people are less willing to save for retirement now, but will become more willing to save in the future.
Vision Super launched the program after the Federal government delayed the increase to the super guarantee rate.
Vision Super CEO Stephan Rowe said they have been working on the program for several years. Rowe said research suggests people are more likely to say no if asked to save more money now, even when given all the information about why they should save more for a comfortable retirement. People need money now, but if asked to save money they don’t have yet, we are more inclined to say yes, for example with a future pay rise.
Vision Super began discussing writing the program into their enterprise agreements in 2014, talking to their default employers and the Australian Services Union (ASU). The idea of the program is instead of giving staff a pay rises, they get a part increase to their pay packet and part becomes an extra contribution to their super. Staff are automatically opted into the program, but have the option to opt out.
Enterprise agreements have long negotiation periods and tend to run for three years before being signed. Mount Alexander Shire Council were the first to have the enterprise agreement program approved in October by Fair Work Australia. More than 70 per cent of their staff have remained on the program.