Super rate of 9.5pc ‘simply too low’: FSC
The financial services industry has warned that 80 per cent of Australians will still be accessing either the full or part pension by 2050.
Financial Services Council chief executive Sally Loane told a conference on the Gold Coast this would be a “huge number”, considering that by then the compulsory superannuation system would have been running for 60 years.
She said while the government’s commitment to no negative changes to the tax treatment of super in this term or the next was welcome after years of tinkering, Australians were still not saving enough.
Even under the Abbott government’s proposed increase in the age pension eligibility age to 70, seven in 10 retirees will still receive some form of the age pension by 2055.
“A superannuation guarantee rate of 9.5 per cent is simply too low to help Australians self-fund their retirement,” Ms Loane said.
Last September the government froze the super guarantee at 9.5 per cent until 2021, at which point it will start increasing incrementally in order to reach 12 per cent by July 2025.
Ms Loane wants the government and the opposition to commit to a 12 per cent rate by 2022, the 30th anniversary of compulsory superannuation.
“We can’t sustain a budget where 80 per cent of us will be on the age pension,” she says.
Research by Rice Warner shows the decision to pause and slow down increases in the super guarantee has resulted in a $136 billion blow-out in the retirement savings gap.
That is the difference between what workers save and what they require for an adequate retirement.
The research shows this gap closes when the super guarantee rises to 12 per cent.
Labor’s spokesman for superannuation Bernie Ripoll said the research confirms the damage done by the government to the super balances of millions of Australian workers.
He said Tony Abbott had promised before the last election no adverse changes to superannuation and then froze the super guarantee and scrapped the low income superannuation contribution.
“These new figures confirm once again that Tony Abbott and the Liberal Party can never be trusted with the super balances of low and middle-income Australians,” Mr Ripoll said in a statement.