The Super Guarantee (SG) should be moved to 12 per cent as soon as possible, rather than from 2021, according to the Association of Superannuation Funds of Australia (ASFA).
“Should the upcoming Budget demonstrate an early pathway to surplus, this provides an opportunity to accelerate the move to 12 per cent sooner, rather than later. Each year we delay is costing Australians superannuation savings that could help improve their retirement outcomes,” said ASFA CEO Dr Martin Fahy.
ASFA modelling shows that an average income earner aged 30 today, and on a $70,000 salary would have $71,600 less when retiring at 67 if the SG stays at 9.5 per cent. For this person, bringing forward the timetable for lifting the rate of SG by two years will boost their retirement savings by an additional $7000.
“The super guarantee is scheduled to increase to 12 per cent from 2021 (concluding in 2025). This is crucial to ensure more Australians achieve an adequate standard of living in retirement above the Age Pension. For all income earners, even those very close to retirement, moving to 12 per cent will mean a more comfortable standard of living in retirement,” explained Dr Fahy.
In the lead up to the Federal Election, ASFA has released a proposed toolkit for the Government, Strengthening Australia’s Superannuation System, to ensure the system continues to provide significant and material benefits.
Apart from improving retirement incomes by moving the SG to 12 per cent as soon as possible, ASFA proposes measures for Government to consider such as:
- Stabilising tax settings for superannuation over the course of the next parliament
- Boosting superannuation balances of women and low-income earners
- Lifting the bar for MySuper in order to deliver the best possible outcomes for fund members
- Ensuring appropriate insurance in superannuation default arrangements are in place for Australians
- Facilitating investment in affordable housing by superannuation funds
- Providing SG for gig economy workers
“ASFA’s fundamental purpose is to help all Australians achieve the best possible retirement outcomes for all Australians. These measures have been designed with that goal in mind, and we look forward to working constructively with all members of Parliament to progress each of the initiatives going forward” concluded Dr Fahy.
Table 1 –Consequences at the individual level of not getting to a rate of 12 per cent for the Superannuation Guarantee
||Super balance at retirement at 12 per cent SG
||Super balance at retirement if SG remains at 9.5 per cent
|30 year old earning $70,000 p.a. with $50,000 in superannuation
||$568,600 – ASFA Comfortable retirement standard
|30 year old earning $60,0000 p.a. with $20,000 in superannuation
|55 year old earning $40,000 p.a. with $100,000 in superannuation
For further information, please contact:
Katrina Horrobin, 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. ASFA’s mission is to continuously improve the superannuation system so people can live in retirement with increasing prosperity.