The Association of Superannuation Funds of Australia Ltd (ASFA) has urged the government’s Henry Review of Taxation Panel to reassess its interim recommendations because they will not result in adequate retirement incomes for the majority of Australian workers.
In its final submission to the review, ASFA has identified a number of flaws in the modeling used in the interim report, and a number of other shortcomings in the report’s analysis. The submission highlights likely future outcomes, with Australia near the bottom of the OECD rankings in terms of providing adequate incomes for retirees.
ASFA’s Chief Executive, Pauline Vamos, said: “Our belief that the average Australian needs to effectively contribute 12% of their income to superannuation over their working lifetime is unshaken. In our submission we have focused on soft compulsion as a mechanism to deliver greater retirement incomes. However, we know that in terms of getting people to achieve an adequate retirement income, compulsory contributions, whether from employers or employees, are the most efficient way to get there.”
“ASFA believes that the current system of taxing super is inequitable to some sections of the population, this is why we are also calling for a reduction in the 15% contributions tax rate for low-income earners,” Vamos added. “Also, it is our view that the AUD450 (USD390) threshold for employers to pay the Superannuation Guarantee should be scrapped. This disadvantages a wide cross section of the community, but most particularly women, who make up the majority of part time employees.”
“We need a system that provides regular income for the average Australian over their retirement to the equivalent of 70% of their pre-retirement salary,” Vamos continued. “Our modeling, as well as figures produced by the OECD, show current superannuation savings will not deliver acceptable retirement incomes for the bulk of the population.”
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