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In response to the latest Intergenerational Report, the Association of Superannuation Funds of Australia (ASFA) and the Australian Institute of Superannuation Trustees (AIST) have called for a lifting of the superannuation guarantee, while the Industry Super Network (ISN) maintains the spotlight on fees and commissions.
The report placed emphasis on the need for increased productivity. However, ASFA stated that this is not enough and that more savings are needed to achieve an adequate retirement income.
“While the 2010 Intergenerational Report released [yesterday] correctly points to the potential roles of increased productivity and increased participation in the labour force, increased retirement savings also can play a crucial role,” said ASFA chief executive Pauline Vamos.
“This will help meet the needs of an ageing population and help reduce government expenditures on health care for the aged.”
Vamos referred to research released over the weekend by the Investment and Financial Services Association, which stated there is a $695 billion gap between current retirement savings and what is needed to deliver the minimum adequate level of incomes in retirement.
“An increase in the effective rate of contributions into superannuation from nine to at least 12 per cent through incentives, assistance and possible compulsion would substantially assist average wage earners,” Vamos said.
The AIST also called for a raising of the guarantee, stating that the report highlighted the need for further debate on retirement income adequacy.
“We need to revisit the adequacy debate and see whether the picture this report paints of retirement in 2050 is where most Australians want to be,” said AIST chief executive Fiona Reynolds.
ISN executive manager David Whiteley said the report provided a strong reminder of the centrality of superannuation for the Australian economy.
He said the report is particularly timely given the Government’s consideration of the Henry Review of taxation, including retirement incomes and recent industry reports identifying a continued gap in retirement savings.
“Based on modelling in the Henry Review interim report, the standard 9 per cent superannuation guarantee contributions will provide a replacement rate of only around 30 per cent of retirement income, which will leave the majority of Australians partly or fully dependent on the public pension for the foreseeable future,” Whiteley said.
“In this context, commissions on compulsory super are all the more unsustainable.”
Whiteley also welcomed the emphasis on increasing part-time work options for those transitioning to retirement, a concept that was promoted in ISN’s 2009 submission to the Henry Review.
