As new research from MLC reveals that 35 per cent of Australians want at least $1.25 million in superannuation by the time they retire, a One Nation proposal to allow Australians to take home 3 per cent of their compulsory super has been attacked for potentially undermining retirement savings adequacy.
One Nation has proposed that members paying rent or a mortgage would have the choice to take home one quarter of the compulsory 12 per cent Superannuation Guarantee (SG) contributions employers pay to their employees’ super, for a maximum period of three years.
The party also proposed this would not be taxed as part of ordinary wages, but as if it were going into employees’ super accounts.
The rationale that a full-time worker earning $90,500 would have an extra $2300 a year and a couple making $168,000 would have $4300 after tax is at odds with the findings from MLC and what AFSA recommends.
The MLC research released on Sunday divides the expected superannuation in three categories: modest, luxe and champagne. Modest retirement includes activities from sports to camping as well as eating out locally every few weeks, annual domestic holidays and a few overseas trips over the course of their retirement.
“Whereas a ‘Luxe retirement’ includes weekly meals out, more international travel, and more freedom,” says Renee Howie, MLC chief customer officer.
“A ‘Champagne retirement’ is exactly what the name suggests; think champagne, clinking glasses, plenty of time overseas or travelling across Australia, the ultimate financial freedom.”
Respondents hoping for a modest retirement (34 per cent) aim at having up to $750,000; those hoping for luxe (31 per cent) aim at a superannuation balance of between $751,000 and $1.25 million; and those aiming for the ‘champagne’ lifestyle (35 per cent) are aiming for more than $1.25 million.
Even the amount needed for a “modest” retirement under MLC’s modelling is more than the $630,000 that the Association of Superannuation Funds of Australia says is needed for a “comfortable” retirement.
ASFA says the that cutting the SG is “is extremely unpopular with Australians”, and warned that the One Nation proposal could both push up inflation and “make people poorer in retirement”.
“Only 18 per cent of people approve of cutting super to 9 per cent, even if the remaining 3 per cent is taken as wages,” ASFA said in a statement.
Meanwhile Super Members Council said if the One Nation proposal would turn super “into an ATM” and, “if it became permanent, the policy would wind back the rise in the Super Guarantee rate from 9 per cent to 12 per cent over the past decade – slashing people’s super by up to $132,000 for an average worker by retirement”.
Advice and adequacy
Data from Vanguard’s How Australia Retires 2026 report shows savings adequacy is one of the top-two barriers to retirement confidence, but retirement planning appears to reduce the retirement age gap from” ideal” (60 years old) and “realistic “(67 years old).
The Vanguard research shows developing a retirement plan is strongly associated with confidence and there is an opportunity to improve access to advice.
Vanguard found that Australians who use a financial adviser are more likely to report high retirement confidence than those that don’t. On the other hand, the report also placed financial advice at the bottom of the list of drivers of retirement confidence.
Financial literacy and retirement knowledge are also associated with retirement confidence, according to the report, which recommends strengthening financial literacy by introducing it on the national curriculum and supporting greater resources, tools and campaigns for different life stages.
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