ABA SAYS NATIONAL REFORM GOALS ARE NEEDED FOR SUPERANNUATION SYSTEM
Canberra, 1 July, 2002:
The Australian Bankers’ Association says Australia needs some long term reform goals aimed at the superannuation system because we are not saving enough for our retirement.
David Bell, Chief Executive of the Australian Bankers’ Association (ABA), today appeared before the Senate Select Committee on Superannuation’s Inquiry into Standards of Living in Retirement in Canberra to provide detail on the ABA’s submission: “Reforming Superannuation: Adequacy and Simplicity”.
“Despite the rise – from today – in the Superannuation Guarantee to nine per cent, many Australians are simply not saving enough for their retirement, and many find the system too complicated,” Mr Bell said.
“Under the present Superannuation Guarantee, a person on average weekly earnings who has saved for 30 years will have only $19,000 per annum which includes a part- pension.” (*see source below)
“Yet, the ANOP research undertaken in May 2001 tells us that six out of ten people feel they need $30,000 or more in retirement.”
“The recent Intergenerational Report shows that mild budget surpluses will swing to chronic deficits in 2017-18 if existing superannuation policies are left unchanged.”
“The Intergenerational Report underlines the importance of tackling these issues sooner, rather than later. The longer we wait, the more expensive it will become to resolve these issues.”
On adequacy, the ABA believes a national goal should be set for significantly increased retirement provision through:
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a combination of individual contributions, extended government co-contributions, reduced tax impact on superannuation and improved incentives for voluntary saving;
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across the board at least 3% additional contributions are necessary, on top of the 9% Superannuation Guarantee;
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for the broad middle income group a 5% contribution, on top of the 9% Superannuation Guarantee, will be needed because this is where the bulk of the adequacy problem lies.
The complexity of our system also must be addressed, so there’s incentives to save more for our later years.
To restore simplicity there are two key directions for reform:
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Moving taxation back to the benefit stage, ideally removing front-end (contributions) taxes altogether;
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and removal of unnecessary grandfathering.
While there are significant Budget issues to consider as a result of the ABA’s proposals, particularly those which would shift taxation to the benefit stage, the short term impacts could be managed by phasing or judicial timing.
The ABA welcomes the introduction of super choice legislation into Federal Parliament, which will allow unlimited super choice for employees, and we strongly support the extension of choice to full portability at some point.
Notes for editors:
Source: Association of Superannuation Funds of Australia Limited Fact Sheet - No 5 – An Inadequate Retirement Income?
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“Intergenerational Report 2002-3, Budget Paper No.5” can be downloaded from the Budget 2002-3 website – www.budget.gov.au
For further information contact:
Heather Wellard
ABA PR
Phone: 02 8298 0411
Mobile: 0409 830 439
ENDS