One of the most disturbing facts to emerge both before and after the recent Conference of Major Superannuation Funds on the Gold Coast is that the level of part-time and casual work in Australia is such that many people are earning so little that they cannot adequately provide for a self-funded retirement.
The equation is simple. These people are earning so little that even if the Government were to legislate a lifting of the superannuation guarantee to 15 per cent, this would still not represent enough for such people to comfortably enter retirement.
Indeed, even if the Government substantially wound back the existing superannuation tax regime, these people would still struggle to fund their retirements.
Once we all understand this simple fact, it becomes easier to understand why the Federal Treasurer, Peter Costello, announced a retirement incomes policy substantially based upon people working beyond retirement age and still having access to their superannuation.
It is a policy based on the pragmatic assessment that a large number of Australians cannot afford to fund their own retirements and that confronted by a rapidly ageing population the Commonwealth will struggle to fund pension payments.
Why did it take so long for this message to emerge as cold, hard fact? Because, while the casualisation of the Australian workforce has occurred relatively quickly, it has occurred quietly. Thus, most projections about the adequacy of the superannuation guarantee were based on the old concept of an unbroken 40 year span in the workforce.
A consequence has been that even today, people still discuss the desirability of retiring at age 55.
However, this new data sends a clear signal that all this must change. Australia is entering a new era and new rules will need to be applied. Furthermore, it will be incumbent upon superannuation fund trustees to ensure their members face this new, harsher reality.
Irrespective of which party gains office at the next federal election, the underlying problems will not alter. Thus, large slabs of Costello’s policy will have a life well beyond that of the Howard Government.
