For a while it seemed that the Government had successfully managed to brush a much called for review of adequacy in superannuation under the carpet. Most players gave up any hope that there would be an inquiry. Even the Association of Superannuation Funds of Australia (ASFA) said it would turn its attention to achieving bite-sized reform instead in the near term.
But now, without huge fanfare, a major review on adequacy is underway, run by the Senate Select Committee on Superannuation. It will spend much of this month conducting public hearings on the matter and has reportedly received over 75 submissions from various industry groups and individuals.
Just how far the committee will — and can — go is anyone’s guess. But, as the Democrats’ new spokesperson on superannuation Senator John Cherry notes, this committee is likely to be the only place for debate on super in this term of government (see p12). And, it’s been an extremely influential committee in the past.
Judging from the tone of submissions, there’s little doubt among the major players in superannuation that our current system and level of Superannuation Guarantee (SG) will not adequately provide the kind of retirement that most Australians would expect.
According to the Investment and Financial Services Association (IFSA), even after 30 years of saving, the current level of SG will only leave individuals with 65 per cent of their pre-retirement income to retire on.
ASFA says the average retiree will only have $19,000 a year to live on, well short of the $25,000 figure it believes is the bare minimum.
A raft of solutions to the problem have been proposed in the many submissions, ranging from increasing the SG, introducing incentives for people to save more voluntarily, cutting the tax on super contributions and shifting super taxation to the benefit stage.
Extending government co-contributions to middle income earners, broadening coverage for casual, part-time and self-employed, allowing the flexibility to work after retirement age and encouraging retirement benefits to be taken as pensions rather than lump sums have also been suggested.
The Government tinkered around the edges in the Budget, and threw in some measures (like co-contributions for low-income earners), which are unlikely to be widely taken up. Tinkering just adds to the complexity of super, and an often repeated criticism in the submissions is that our system is just too complex.
What we really need now is some signs of leadership and courage — and a push for a comprehensive and well thought out system that will take Australians into a ‘no worries, mate’ retirement and ensure that this remains the lucky country.
