Millions of low and middle-income Australian families will not have enough to retire on if the government cuts the super rate, new Industry Super Australia analysis reveals.
The super guarantee has been legislated to rise from 9.5% to 12% by 2025 – with the first 0.5% increase in July, yet the government has indicated it is considering ditching its election promise to lift the rate.
New analysis, which adopts a more sophisticated microsimulation approach to modelling adequacy than used by the Retirement Income Review, shows if the super rate is frozen at 9.5% about half of all middle-income Australian families will not reach the benchmark of a retirement income that is 65% of what they earnt while working. (See chart 1 below).
Cutting super will mean these hardworking families would be forced into making drastic lifestyle cuts and some could be pushed towards poverty in retirement.
Women, those on lower-incomes and the young will suffer the most if the super rate is cut.
Of the 6.1 million workers who will receive the scheduled SG increase in 2021, most will be women – 3.2 million, about 63 per cent of those who get the super increase are earn less than $70,000 and more people in their 20s will get the increase than any other age bracket.
Industry Super Australia has released a new report the Super Guarantee: Why we need 12% – it details how the legislated Super Guarantee increase will:
- · Add $170,000 to the retirement nest egg of the average 30-year-old couple;
- · Save $33 billion in Age Pension costs over coming decades;
- · This year, on average, only cost $8 a week for a full-time worker and $5 for a part-time worker;
- · Inoculate retirees from future adverse changes to the aged pension;
- · According to an ACIL Allen report add $12 billion to Australia’s GDP, create 10,000 jobs and increase real wages.
The Superannuation Guarantee is a critical response to the ageing population and improves retirement incomes of working people in a fiscally sustainable manner. Although still maturing, annual superannuation retirement benefit payments are already double age pension expenditures.
The government MPs wanting to cut super all gleefully pocket more than 15% on top of their generous parliamentary wage – they know 9.5% is not enough – which is why they gave themselves more.