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Aussies should get more freedom over their savings says Grattan Institute
AN Australian think tank has questioned whether the compulsory superannuation guarantee should be increased to 12 per cent given not all retirement savings are in super.
The former Tony Abbott-led coalition government froze the super contribution at 9.5 per cent until mid-2021, after which it will gradually rise to 12 per cent by mid-2025.
Under Labor it had been due rise to 10 per cent in mid-2015 and hit 12 per cent by mid-2019.
A new analysis by the Grattan Institute has found that assuming “savings for retirement” is the same as “superannuation savings” is a big mistake, because most Aussies also have other savings on top.
Using both Australian Bureau of Statistics and the Melbourne Institute’s HILDA survey it says super savings account for just 15 per cent of the wealth of most households.
“Even without counting the family home, the average Australian saves as much outside as inside the super system,” Grattan Institute head John Daley says.
Mr Daley says ignoring non-super savings may lead policymakers to force people to save too much through superannuation, if the compulsory guarantee is lifted from 9.5 per cent to 12 per cent as legislated.
“There are powerful vested interests pushing the idea that super equals retirement savings, yet such a view is inconsistent with the facts,” he said.
He says it will be another two decades before typical retirees will have contributed at least nine per cent of their wages to super for their entire working lives, yet younger households have assets outside super as large as those inside super.
A recent Reserve Bank study found for each extra dollar of compulsory super it has only offset non-super savings of between 10 and 30 cents.
Mr Daley doesn’t think people will stop saving outside of super, especially when other assets, such as negatively geared property, are lightly taxed.
Having savings outside of super gives households an option to use it before turning 60.
And people have also been nervous the government may change the superannuation rules before they retire.
Originally published as Aussies should get freedom over savings