The Association of Superannuation Funds of Australia (ASFA) has called for the compulsory superannuation guarantee to be lifted to 15 per cent, an extension of the superannuation co-contribution regime, the abolition of phasing-out of the superannuation contributions tax and an end to age-based contribution limits.
In a submission to the House of Representatives Standing Committee inquiry into improving superannuation savings for people under 40, ASFA makes clear that the current superannuation guarantee regime is not adequate to help most people achieve a comfortable self-funded retirement.
“An individual needs a substantial number of years of contributions together with a substantial annual salary in order to generate retirement savings of the order of $500,000 or more, which is the amount needed to generate sufficient income in retirement to support a comfortable lifestyle for a couple retiring at age 65,” ASFA said.
The industry body produced research which revealed a substantial gap between what the superannuation guarantee would deliver and what would be required to generate retirement incomes of the order “wanted and expected by many individuals currently aged under 40”.
It said that even leaving the task of additional savings until 20 years before retirement left a substantial savings task.
“Accordingly, ASFA considers that, in order to better meet retirement income needs and expectations, contributions be increased in effect to an amount equivalent to 15 per cent of wages through a combintion of compulsory contributions, voluntary contributions and tax relief,” ASFA said.
It said this could be achieved by increasing the total amount of compulsory and voluntary contributions to 12 per cent of wages and salaries and by the government assisting by removing the tax on contributions
“The combined effect would be similar to a 15 per cent contribution under current superannuation tax arrangements,” ASFA said.
