The Association of Superannuation Funds of Australia (ASFA) says the national debate about superannuation is too focused on tax concessions and access age.
Calling this “the wrong conversation”, the body said discussions must centre first and foremost on the gaps in the system and its ability to deliver adequate retirement income.
In releasing a new report on equity in superannuation, ASFA identified what it believes are several flaws with the current system.
All Australians need an adequate retirement income
Equity in superannuation – the real issues refocuses the debate on the vast majority of the population (more than 95 per cent, according to ASFA) who have too little in retirement savings.
It further concludes that superannuation policy should be focused on how to improve retirement incomes for the majority of the population; that a high income does not always equate with a high superannuation balance (especially the case with women); high income earners are not necessarily high income earners all their lives; and asks who should be in the system and who currently is not.
“A successful retirement system has broad coverage. This means public policy must be focused on achieving better retirement savings for the bulk of the Australian population,” said ASFA chief executive Pauline Vamos.
“This does not mean that the superannuation system should never change, but any reforms should be considered against whether they assist in meeting the objective of ensuring that all Australians achieve an adequate retirement income, not on the short-term-budget bottom line.
Focus on the inappropriately covered
“The paper identifies five main categories of Australians who tend to be over-represented in the lower income deciles, and identifies where the current tax concessions and compulsory super arrangements are working well and where there is room for improvement,” says Vamos.
Those identified in the paper as being in most need of assistance include:
1. The self-employed
2. Individuals on paid parental leave
3. Those under the $450-a-month threshold for receiving the Superannuation Guarantee (SG)
4. Indigenous Australians
5. Recently divorced men and women
“Any discussion around the right access age to super is a complex one as most people do not retire voluntarily,” said Vamos.
“Furthermore, the majority of Australians retiring today have not had the benefit of a lifetime of compulsory super, which was introduced 20 years ago. We know for workers who will have the benefit of 12 per cent over their working life that this will deliver an adequate retirement income.
“But the real issue is that there are a significant number of Australians, as this report identifies, who are not appropriately covered by the system. This should be our focus.”
For access to the full report, click here.
