Stalling the rise of the superannuation guarantee (SG) beyond 9.5 per cent of income until 2021 will ensure Australians will be unable to meet their needs in retirement, former Prime Minister Paul Keating believes.
In an opinion piece published in The New Daily, Keating warned that the Federal Government's decision to "pause" the SG would cost the average Australian worker $100,000 over the course of their working life, describing it as "sabotage".
"Mandatory superannuation contributions at 9.5 per cent spread over a 35 year working life for someone on $100,000 to $150,000 per annum will provide an income after retirement of roughly 50 per cent of pre-retirement income," he said.
"This is way below the 70 per cent of pre-retirement income replacement a Superannuation Guarantee at 12 per cent would provide. And 70 per cent is the level adjudged by income specialists and welfare groups as the appropriate level of disposable income needed in retirement.
"[The] decision represents nothing other than the wilful sabotage of the nation's universal savings scheme. And sabotage for reasons only of prejudice."
"The Government's connivance with PUP to spike superannuation at 9.5 per cent has little to do with the budget balance this year, or in the early out years, and everything to do with cheap ideology."
Keating also rejected the claims of Prime Minister Tony Abbott and Palmer United Party leader, Clive Palmer, that people would be better off with more cash in hand now, than savings later.
"They omit to say that superannuation savings represent deferred consumption, not lost consumption," he said.
"That their superannuation contributions become compound savings — where the earnings on their accumulations are in tax terms permitted to earn further. That is earnings on the earnings…which over a lifetime grow exponentially to support a person in retirement."
He added that the decision to stall the progress of the SG would put "the pension back at centre stage, as retirees find that their superannuation accumulation is not large enough to live from without pension supplementation".
