The Grattan Institute on Friday (9 February) argued that increasing the 9.5 per cent superannuation guarantee would lead to lower wages and poorer living standards for low-income workers who are predominantly women.
However, the Association of Superannuation Funds of Australia (ASFA)and the Australian Institute of Superannuation Trustees (AIST) weren’t having it, with both registering their rejection of the report within hours.
“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,” said the CEO at ASFA, Dr Martin Fahy.
“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.”
Arguing that the paper had a fatalistic view of women’s future earnings potential, he said the super system should be focused on lifting women’s long-term prospects through more money in super.
Conceding that Grattan’s proposed rental assistance plan would cost around $140 million a year and as such would be affordable within the overall budget context, Dr Fahy nevertheless argued that the assistance alone is not enough to build comfortable retirements.
“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,” he said.
AIST added that all Australians would enjoy the rewards that would come with boosting the superannuation guarantee from 9.5 per cent to 12 per cent.
AIST CEO Eva Scheerlinck said that if the super guarantee remained at 9.5 per cent, most Australians would be denied an adequate income in retirement. It would also mean a higher age pension cost.
“A 12 per cent SG rate not only addresses the challenges of Australians living longer in retirement, it also ensures that future generations of taxpayers – the young people of today – are able to support a rapidly ageing population,” Ms Scheerlinck said.
Further, she said that while the move to a higher compulsory superannuation guarantee has been delayed, employers haven’t taken the opportunity to boost wages in the interim. ASFA’s Dr Fahy echoed the sentiment, arguing that there is little chance that foregone increases to the SG amount would actually lead to higher wages.
Ms Scheerlinck acknowledged that wealth inequality in retirement to the extent of poverty was a problem, but contended that leaving the superannuation guarantee untouched was not a solution.
She concluded: “Women who have been low income earners throughout their working life and don’t own a home should not have to choose between housing security and an adequate income in retirement.”