Only 'Well-Heeled High Earners' Benefit From Superannuation, Report Finds
Both sides of politics have rejected calls to ditch an increase to the superannuation guarantee from 9.5 percent to 12 percent, amid concerns mothers and low-income earners will suffer.
Federal Treasurer Josh Frydenberg has made it clear the Government will not be taking on board the recommendations of a Grattan Institute report, which called out superannuation companies for making people paranoid they won't have enough cash for their later years.
“It is important people have certainty around how much their compulsory superannuation contributions will be into the future, so they can plan accordingly,” Frydenberg said.
According to the Grattan Institute's report released on Wednesday, four out of ten Aussies can expect a pay rise in retirement.
"We do think that people are needlessly worried," Grattan Institute's chief executive John Daley told 10 News First.
The Grattan Institute took aim superannuation companies for scaring Aussies by suggesting they won't have enough cash.
The peak super body --- The Association of Superannuation Funds of Australia -- currently recommends retiring with $545,000 for an individual or $640,000 for couples.
The report recommends workers get paid more now in order to increase what retirees end up with.
"Rather than get a planned increase in super that will take contributions from 9 to 12.5 percent," Daley said.
Grattan did economic modelling that found even after allowing for inflation, most workers today could expect a retirement income of at least 91 percent of their pre-retirement income.
Labor’s financial services spokeswoman Clare O’Neil said the opposition "respectfully disagrees".
Fury and backlash was quick to surface from the funds management industry.
The main counter arguments seek to barrack for mothers and low-income earners who critics say would suffer under proposals not to increase superannuation.
“This report is about two Australias, where the well-heeled high earners have a fully funded retirement and the rest rely on the state,” Dr Fahy said to superannuation-funded website The New Daily.
Implementing it would prevent lower-income workers reaching reasonable levels of financial independence, he said.
“The Grattan Institute wants to dismantle our world-class retirement funding system and replace it with a model that has two-thirds of the population relying on the age pension,” Association of Superannuation Funds of Australia CEO Martin Fahy said.
Older Women Also Vulnerable
The report did acknowledge that retirement income for renters in Sydney and Melbourne is a problem.
The fastest growing demographic of people experiencing homelessness in Australia is single women over the age of 55.
Recent data from the Australian Bureau of Statistics (ABS) shows the average woman's lifetime super balance is $101,700, which is 66 percent of the average man's at $153,000.
Lisa Annese, chief executive of the Diversity Council of Australia, calls this the 'motherhood penalty'.
In 2012, the DCA found that only 10 percent of its 500 member organisations were paying superannuation during unpaid parental leave periods.
According to the Workplace Gender Equality Agency mothers earnings decrease further for each additional child they have.
Add part-time work into that mix, and mums are missing out.
In its 2016 submission to the Productivity Commission’s draft report into Superannuation Competitiveness and Efficiency, one of DCA's recommendations was to "provide women with additional contributions to superannuation and pay superannuation on the unpaid portion of parental leave."
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