ASFA claims Grattan attacking ordinary Australians

8 November 2018

The Association of Superannuation Funds of Australia (ASFA) has joined the dissenters to the Grattan Institute’s retirement report, released yesterday, slamming it as “an unprecedented attack on the retirement aspirations of ordinary Australians”.

The report recommended postponing the increase of the Superannuation Guarantee to 12 per cent, taxing earnings in retirement at 15 per cent, and changing the Age Pension assets test to include the value of a home above a certain threshold.

It also suggested that the belief of industry groups that Australians would not have enough for retirement was misplaced.

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ASFA hit out as these suggestions as intended to dismantle the current superannuation system and replace it with a model that would have two-thirds of the population reliant on the Age Pension.

“This report is about two Australias, where the well-heeled high earners have a fully funded retirement and the rest rely on the state,” ASFA chief executive, Dr Martin Fahy, said.

“In a world where there are broken work patterns, and where women’s balances are 40 per cent less than men, Grattan wants to leave large parts of our society exposed to poverty in retirement. That would be a world where only the few can afford health insurance and where retirement is a dreary replay of the 1950s.”

The Association said that the Grattan analysis set “an extremely low bar for adequacy” in retirement income, when in reality “the great bulk of Australians want and need a retirement lifestyle in line with the ASFA comfortable level”.

It warned that the ratio of workers to retirees would halve from around 4.5 people today to 2.7 in 2055 and that, without superannuation, hitting a comfortable retirement level would be untenable then.

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By maintaining the SGL at current rates this caps the cost to employers and does not inhibit wages growth. The Aged Pension is linked to the AWOTE index. When this grows so does the AP. I used to believe ASFA's "Comfort" retirement level theory of approx. $60,000 pa. However, I did have some concerns and the Grattan Institute addressed these very well in their latest report. I believe that the Superannuation Industry does rely on scare-mongering tactics to keep Australians fearful of retirement. After all, it's the Super Funds that stand to benefit from more fees. It's very reassuring when reading Grattan's viewpoint that most Australians will have a good income in retirement (70% replacement value) than what the ASFA and associates are saying that we need. Also, I'll be very glad when every Australian can have reduced fee superannuation that does not (by default) include insurance that is not required by the majority of workers. It's been a long time coming! ps - I have just moved all of my superannuation to an Industry Fund. This equates to less fees, better performance and a much better retirement income outlook. If only more Australian workers kept and eagle eye on their Super funds then they'd soon come to realise that for the majority of retails funds all they're doing is propping up the profits for shareholders and nice bonuses to management and financial planners.

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