Fiona Reynolds
The Commonwealth’s superannuation co-contribution regime introduced by the former Howard Liberal Government is failing to appropriately assist low and middle-income earners, according to research commissioned by the Australian Institute of Superannuation Trustees(AIST).
The research, released at the Conference of Major Superannuation Funds in Brisbane, found that the co-contribution scheme was most benefiting older people with disposable income rather than benefiting young families and those on lower incomes.
The research findings were released at the same time as the chief executive of the AIST, Fiona Reynolds, called for more help for women in achieving adequate retirement incomes.
She said that there should be an extension of the co-contribution, a super baby bonus to help compensate women for career breaks and a lift in the age pension.
The research findings have prompted the AIST to call on the Government to implement changes that would see the co-contribution regime extended in a way that would help low and middle-income earners.
The AIST research and policy manager, Andrew Barr, said that increasing the attractiveness of the regime for lower income people, and improving access to inexpensive and independent financial advice, would assist in improving access for those who most needed it.
“The co-contribution could be a really positive scheme for retirement savings,” he said. “However, it will need some changes to live up to its potential.”
Discussing the findings of the research, Barr said that one of the clear things to emerge from the research was that the take-up was still very low among young people.
He said this might be explained by the fact that older people had more disposable income because they were empty nesters and were psychologically more attuned to retirement issues.
“If we really want to build retirement savings, increased participation by younger people will build bigger benefits through a longer investment period,” Barr said.
He said that the feedback AIST had received suggested that most people thought the co-contribution system was a good thing but financial pressures were stopping many from participating.
