Australians want to have a high standard of living in retirement, and they are prepared to pay for it via a 12 per cent super guarantee, writes Dr Martin Fahy in the Australian Financial Review.
The Grattan Institute is making the same mistake unsuccessful pundits made with respect to the federal election, by making assumptions about what Australians want.
Based on a flawed interpretation of the data, its modelling envisages an austere future that stymies aspiration and refuses to redefine retirement to meet the changing expectations of Baby Boomers and working Australians.
Superannuation is about lifting living standards in retirement and it does this on a cost-effective basis.
We know that Australia beats most other countries when it comes to reducing the fiscal impact of the age pension. Even when tax concessions for superannuation are factored in, it is well below the current OECD average and will be even more affordable by 2050. We currently spend 2.6 per cent of GDP on the age pension, down from 4 per cent in 2015 and significantly below the OECD average of 8.9 per cent. We spend less than Canada, Germany and the UK. The only countries that have a lower fiscal burden are Mexico and Korea.
We know that Australians would rather their retirement be substantially self-sufficient and reserve the full age pension for those who need it most.
Increasing the super guarantee to 12 per cent is a way of ensuring the best future for all Australians. Refusing to move to 12 per cent condemns nearly 70 per cent of Australians to dependence on the age pension during retirement.
Dr Martin Fahy is chief executive of the Association of Superannuation Funds of Australia.
Australians don’t want a Dickensian retirement (Australian Financial Review)
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