The peak body for the superannuation industry said the increase in the Superannuation Guarantee (SG) was good for the economy, affordable, equitable and necessary.
The Association of Superannuation Funds Australia (ASFA) urged Canberra to stop debating around the edges and support this important reform.
"It is imperative that federal politicians support legislation to increase the Superannuation Guarantee to 12 per cent," said Pauline Vamos, chief executive officer of ASFA.
"Nine per cent will not be sufficient to deliver dignity in retirement for the majority of Australians.
"This reform is important for individuals and good for the economy," said Ms Vamos.
"The more people save today for tomorrow the more self-reliant they become in retirement: The recent turmoil in Europe and the US, where there have already been cuts in state pension benefits, demonstrates the importance of self-reliance."
AFFORDABLE
The increase to 12 per cent is affordable for employers, employees and the Government. Already 25 per cent of Australian workers receive more than nine per cent contributions. Given the increase is to be phased in over eight years, employers will not face any sharp increase in labour costs, and workers will not face any cut in take-home pay.
For the Government over time, the foregone Pay-as-you-earn (PAYE) tax revenue will be offset by the increased revenue from taxation on super fund earnings.
EQUITABLE
All working Australians will benefit from 12 per cent contributions and the decreased burden on the public purse.
Tax benefits for upper income earners are limited, given there is a cap on SG contributions. Lower income earners will soon receive the low-income tax rebate, further bolstering their super and improving the equity of the system.
NECESSARY
Today there are five working people to support each Australian aged 65. By 2050, this is projected to drop to 2.7 working people. The pressures on government budgets due to the ageing population are huge.
While superannuation balances have been growing, nine per cent is still not enough to deliver a comfortable standard of living in retirement. Based on the expenditure needs in ASFA's Retirement Standard, taking into account the Age Pension, a single retiree needs an account balance of about $430,000 in today's dollars to support a comfortable retirement, while a couple needs around $510,000.
GOOD FOR THE ECONOMY
Boosting superannuation boosts the Australian economy, increasing the nation's GDP, creating jobs and providing much-needed private and public infrastructure investment.
According to a report by Allen Consulting Group, commissioned by ASFA, an increase in the SG to 12 per cent would lead to a 0.33 per cent increase in (real) GDP by 2025 compared to the no-reform scenario.
"This will equal about $195 extra in the hands of every Australian in 2025, or an extra $520 for every household," Ms Vamos said.
"The Allen research provides strong support that a move from nine to 12 per cent would be not only good for the retirement futures of current workers but would also have no adverse affect on employers."
The report concludes that while employer costs could be increased in the short-term, the impact in any given year would be, at most, 0.25 or 0.5 per cent of wages. That's $250 to $500 for a small employer with a wages bill of $100,000.
For media inquiries, please contact:
Pauline Vamos, 0433 169 342
Rebecca Glenn, GM marketing and communications, 0416 170 439
Megan McDougall, communications and media co-ordinator, (02) 8079 0849
About ASFA - the voice of super
The Association of Superannuation Funds of Australia is the peak industry body representing the superannuation and retirement industry. Its members represent over 90 per cent of the approximately 12 million Australians with superannuation. ASFA members manage or advise on the bulk of the $1.3 trillion in superannuation assets as at September 2011. ASFA is the only organisation that represents all types of superannuation funds (retail, industry, corporate and public sector) and associated service providers.