David Whiteley, chief executive of Industry Super Australia (ISA), which represents not-for-profit funds, said: “it is hard to believe the government would seriously consider capping increases to universal, compulsory super, one of the major pillars in our retirement income system and our economy.”
“These proposals would reduce individual savings of millions of super fund members, reduce national savings and increase pension outlays,” Mr Whiteley said.
ISA research shows a typical female industry super fund member, earning at most 70 per cent of average full-time wages, could expect to lose $74,293 in retirement benefits in real terms over her entire working life under the proposals.
Mr Whiteley said the proposed freeze would cut a person’s super balance at retirement by 20 per cent and reduce national super savings by more than $900 billion by 2055.
ISA modelling also shows the government would need to pay 6 per cent more in age pension outlays to make up for the shortfall in superannuation savings, which would increase pressure on taxpayers and the long term budget.
The Treasury department has “identified the budget costs” of increasing the super guarantee “as an avenue to further savings”, according to The Australian newspaper, which did not name a source.
The government and employers would benefit
Other super proposals could see an increase in the tax rate applied to superannuation contributions from the current flat 15 per cent level for most working Australians, a move that would skim billions of dollars more into the Commonwealth’s coffers.
Such measures would combine with changes already announced, including a lowering of the amount of assets individuals or couples can have outside of their family home to quality for the aged pension from January 2017, and the scrapping of the low income superannuation contribution from mid 2017.
Legislation to progressively increase the retirement age and eligibility for the Age Pension from the current 65 out to 67 will also come into effect next year.
Pension costs would rise
Meanwhile, Pauline Vamos, the chief executive of the Association of Superannuation Funds of Australia (ASFA), said a potential freeze in the rate of the superannuation guarantee would also lead to increased government expenditure on the aged pension in the near future.
According to ASFA estimates, retaining the super guarantee of 9.5 per cent would result in around 40 per cent of retirees relying on the full aged pension by 2050. The government expenditure on the aged pension would consequently need to rise by approximately 25 per cent.
Council of the Ageing chief executive Ian Yates said no further changes to the system should be made until a full independent review is conducted.
“Our position has been constant for a long time that we need a proper independent review of the superannuation system,” Mr Yates said.
“Any changes should be based on proper actuarial research, and super shouldn’t be kicked around as a political football.”
“These proposals would reduce individual savings of millions of super fund members, reduce national savings and increase pension outlays,” Mr Whiteley said.
ISA research shows a typical female industry super fund member, earning at most 70 per cent of average full-time wages, could expect to lose $74,293 in retirement benefits in real terms over her entire working life under the proposals.
Mr Whiteley said the proposed freeze would cut a person’s super balance at retirement by 20 per cent and reduce national super savings by more than $900 billion by 2055.
ISA modelling also shows the government would need to pay 6 per cent more in age pension outlays to make up for the shortfall in superannuation savings, which would increase pressure on taxpayers and the long term budget.
The Treasury department has “identified the budget costs” of increasing the super guarantee “as an avenue to further savings”, according to The Australian newspaper, which did not name a source.
The government and employers would benefit
Other super proposals could see an increase in the tax rate applied to superannuation contributions from the current flat 15 per cent level for most working Australians, a move that would skim billions of dollars more into the Commonwealth’s coffers.
Such measures would combine with changes already announced, including a lowering of the amount of assets individuals or couples can have outside of their family home to quality for the aged pension from January 2017, and the scrapping of the low income superannuation contribution from mid 2017.
Legislation to progressively increase the retirement age and eligibility for the Age Pension from the current 65 out to 67 will also come into effect next year.
Pension costs would rise
Meanwhile, Pauline Vamos, the chief executive of the Association of Superannuation Funds of Australia (ASFA), said a potential freeze in the rate of the superannuation guarantee would also lead to increased government expenditure on the aged pension in the near future.
According to ASFA estimates, retaining the super guarantee of 9.5 per cent would result in around 40 per cent of retirees relying on the full aged pension by 2050. The government expenditure on the aged pension would consequently need to rise by approximately 25 per cent.
Council of the Ageing chief executive Ian Yates said no further changes to the system should be made until a full independent review is conducted.
“Our position has been constant for a long time that we need a proper independent review of the superannuation system,” Mr Yates said.
“Any changes should be based on proper actuarial research, and super shouldn’t be kicked around as a political football.”
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