Australia. There is a problem with retirement incomes, but it isn’t the super guarantee
There is a case for not proceeding with, or at least further deferring, the legislated increase in employers’ compulsory superannuation contributions from 9.5 per cent to 12 per cent.
But the Grattan Institute’s latest analysis, published in The Conversation and elsewhere, does not make this case.
Rather, it demonstrates extremely well a totally different problem with our retirement incomes system, and falsely ties it to our 9.5 per cent so-called “super guarantee”.
That problem is that the pension assets test, tightened in 2017. The problem is the pension assets test For a significant group of middle-income earners, Grattan finds that an increase in savings through the super guarantee would lead to a reduction in lifetime incomes.
But that is equally true of a voluntary increase in savings, in any form other than increased investment in the family home.
A better designed assets test, preferably through a merging of the income and assets tests, would ensure that increased savings boosted at least retirement incomes. It would ensure we didn’t penalise thrift.
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