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(August-2002) Bolstering retirement savings
Asset Super
As a director of ASFA, I appreciate that people do need to save more towards their retirement, and therefore I’d like to see incentives put in place to encourage the practice.
At the moment all the statistics being prepared by ASFA indicate that a nine per cent contribution over a working life will be insufficient, as this will only reap a retirement income of $19,000 a year.
ASFA believes the target should be $25,000 a year with future measures put in place to allow for a realistic $30,000 per annum.
I believe the issue of adequacy is definitely a problem that can be solved by adopting a variety of measurers to encourage people to save for their retirement.
These measures were highlighted in a paper ASFA recently prepared for its submission to the Senate Select Committee and included:
Phasing out the contributions tax on super and boosting individual contributions;
Expanding the Government co-contributions to middle-income earners;
Broadening coverage — for example, for casual, part-time and self-employed workers; and
Improving integration between social security and private retirement income, and allowing flexibility to work after retirement age.
LYN GEARING — CEO of NSW State Super and First State Superannuation
I support the ASFA paper totally. The first change I would like to see is the gradual reduction of the contributions tax with the aim of eliminating it completely over, say, a 10-year period.
It is unrealistic to expect many low and middle-income workers to be able to make additional personal contributions to super above the compulsory statutory guarantee level.
PETER LAMBERT — Fund secretary of Goodman Fielder Superannuation Fund
The simplest solution is to increase the minimum contribution level to a figure above nine per cent. However, given the current Government seems intent on developing incentives to encourage people to contribute higher levels, rather than requiring them to do so, its main focus should be on simplifying taxation.
We currently have one of the few systems in the world where superannuation is taxed at its accumulation stage — the critical stage where individuals decide whether or not to devote some of their disposable income towards superannuation — rather than reducing or removing this impost (not to mention the dreaded surcharge). Instead, we have a complicated series of rebates for spouse contributions and low-income earners. By its proposal to introduce further concession arrangements, the Government is simply adding another layer of complexity. This complexity ultimately drives the average person away from superannuation — the very person that the Government should be looking to do more for to encourage a higher level of retirement saving.
ERNEST BENNETT — CEO of Health Super
The issue of adequacy centres on the three S’s — sufficient, sustainable and simple.
Sufficient, in that there should be sufficient retirement streams for those Australians who are not employed, so that no-one falls through the cracks.
The second s is sustainable. Any retirement incomes policy has to be sustainable to support an ageing population. We need to get as many people paying into self-paying schemes as possible to take the burden off the tax system, given there will be many more non-income earners compared to income earners in the future.
The third s is simple. Super is a simple concept made ridiculously complicated by complex taxation, so changes have to be made to the existing tax-structure to simplify the whole process.
It should be debated at a bipartisan, or even tri-partisan level to include the Democrats, as it affects everybody.
AUTHOR
Zilla Efrat
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