Despite the Retirement Income Review (RIR) being published, there are still polar opinions when it comes to increasing the superannuation guarantee (SG), with some industry experts saying they are “ambivalent” as to whether it rises or not.
Speaking on an Association of Superannuation Funds of Australia (ASFA) panel to discuss the Government’s RIR, Challenger chair, Jeremy Cooper, said he was ambivalent and lacked a strong view whether the SG increased to 12% or not.
“We are in low interest rate, low growth, low wage rise environment – it’s a global thing. There are no personalised SG rates and this affects everyone across the system. I’m very ambivalent, I don’t have a strong view one way or another and it’s absolutely a governmental decision,” he said.
“The magic of system is that we went to 9% in 2002 and it’s quite incremental for me. Personally, 9.5% to 12% I find much more incremental and it will take a long time. If you’re over 50 it’ll barely have an impact on retirement outcomes, certainly if you’re 30 it will. There’s a lot of other things swimming around this issue.”
Cbus group executive brand, advocacy, and product, Robbie Campo, disagreed and said the SG increase was significant for those earning minimum wage.
“I’m not ambivalent. One of the benefits of system is that it is incremental. The increases are not perceptible in terms of people’s loss of take-home pay, they don’t notice that, and it’s not actually for most people a real hard impact.
“Certainly, even though what the report found was those in bottom third, who would largely be minimum wage earners, there’s not nearly any offset of super because the assessment was made across the system.
“Even if you accept that there’s no real offset because their loss of retirement is more significant over their lifetime – $28,000 – than the modelled assumed increase in working life income which is $12,000.
“Certainty the impacts for different cohorts are very different and those seeing inadequate levels of retirement income that was found in the report are those who will benefit from increasing the SG and for whom this reported trade-off is not really even there even if you accept that it occurs.”
However, they both agreed that the superannuation system could not cure housing affordability.
“Housing affordability isn’t about money, it’s lack of supply. Taking money out of super and putting it into a system where there is insufficient supply will drive up the cost,” Campo said.
“There are other things that better address lack of availability of housing.”