The Association of Superannuation Funds of Australia (ASFA) today said the latest paper from the Grattan Institute was replete with Victorian era proposals to fix the gender gap in Australian retirement incomes.
ASFA CEO Dr Martin Fahy said the Institute’s paper, canvassing the best way to close the gap, adopted a fatalistic view of the future earnings of women and low paid workers and condemned them from an early age to poverty in retirement.
“This is simply Grattan having another go at super, urging abandonment of legislated increases in the Superannuation Guarantee (SG) and ignoring the reality that lifting SG and in fact, doing it faster, is the real solution to improving women’s retirements,” he said.
“This paper adopts a set-and-forget view of class and income inequality. Proposals to fix the Budget by substantially cutting back on super entitlements and then giving a relatively few older, low income, retired women in rental accommodation less than $10 a week, are insulting and demeaning.
“Instead, we should be lifting women’s long term prospects with more money in super. Dignity in retirement requires a decent retirement income.
“There are around 270,000 Age Pensioner households on rent assistance and giving each of them the additional rental assistance proposed by Grattan would cost only around $140 million a year. Such a measure is affordable within the overall Budget context and should be considered on its own merits.
“The Age Pension and rent assistance alone cannot provide an adequate or acceptable retirement for Australians. The paper misses the reality of retirement living costs in Australia and the aspirations of the community to live comfortably, not just survive, in retirement.”
Even for a person on $40,000 a year (below even median employment earnings) compulsory superannuation contributions supported by tax concessions have important roles to play in improving retirement outcomes.
For such a person aged 30 and with a current balance of $20,000, the compulsory superannuation system will deliver an estimated $236,500 at retirement.
For a single person this will increase retirement income from $23,254 a year (the Age Pension) to $33,670 a year. Contrary to the assertions made by Grattan, the superannuation savings will only decrease the Age Pension entitlement by a small amount.
Dr Fahy said the paper reduced wage determination to a simple trade-off between superannuation and wage increases.
“This is an over-simplification,” he said. “Furthermore, in the current wage bargaining environment, it is unlikely that foregone SG increases would translate directly into wage increases.
“Grattan’s goal is really all about saving Budget money in the short term. It ignores critical intergenerational challenges facing Australia.
“Their solution to closing the gender gap is to make most people worse off in retirement by slashing tax concessions and to rip $4 billion from individuals.
“Most Australian retirees would be concerned by the proposal that earnings from super balances in retirement should be taxed at 15 per cent.
“The last thing retirees want is a new tax when they are already facing increasing aged care and health care costs.”
Dr Fahy said the solution to the gender gap in retirement savings lies in addressing issues such as the gender pay gap, disparities in the allocation of home and family care duties and the broken patterns of employment that many women experience.
For further information, please contact:
Teresa Mullan, Media Manager, 0451 949 300.
ASFA is the peak policy, research and advocacy body for Australia's superannuation industry. It is a not-for-profit, sector-neutral, and non-party political national organisation, which aims to advance effective retirement outcomes for members of funds through research, advocacy and the development of policy and industry best practice.