Australia’s world-class retirement savings system is in danger of failing unless the Government moves more promptly to lift the superannuation guarantee to 12 per cent, according to leading retirement income specialist, Mercer senior partner, David Knox.
Knox claimed the 12 per cent superannuation guarantee rise proposal had been sidelined by the focus on the carbon tax, which overlooked the reality that superannuation would have a much bigger impact on personal living standards than either a carbon tax or an emissions trading scheme.
He said opponents to the increase in the superannuation guarantee from 9 to 12 per cent claimed taking 3 per cent from wages would lead to a drop in living standards, but Mercer did not believe this would be the case.
"The real decline in living standards will come much later as our incomes drop when we hit retirement, unless we raise the superannuation guarantee now," Knox said.
He pointed to recent Organisation for Economic Cooperation and Development research which showed under the current 9 per cent SG regime retirees could look forward to a net income, after allowing for tax and the age pension, that was little more than half their net income before they retired.
"This is not good enough for a retirement savings system that continues to be held up as one of the best in the world," Knox said.
"Increasing the level of Australia’s compulsory superannuation will not only improve the living standards of future Australian retirees, it will boost the long-term sustainability of the economy," he said. "More money in super means there are more funds available for a range of investments within Australia, as well as providing the economy with greater protection from external shocks."
