The Association of Superannuation Funds of Australia (ASFA) has called out the latest paper from the Grattan Institute as “replete with Victorian-era proposals to fix the gender gap in Australian retirement incomes”.
ASFA chief executive Martin Fahy said the paper, which canvassed the best way to close the gap, adopted a fatalistic view of the future earnings of women and low-paid workers, and condemned them from an early age to poverty in retirement.
“This is simply Grattan having another go at super, urging abandonment of legislated increases in the superannuation guarantee (SG) and ignoring the reality that lifting the SG and, in fact, doing it faster is the real solution to improving women’s retirement,” Fahy said.
“This paper adopts a set-and-forget view of class and income equality.
“Proposals to fix the budget by substantially cutting back on super entitlements and then giving a relatively few older, low-income, retired women in rental accommodation less than $10 a week are insulting and demeaning.”
He said instead, women’s long-term prospects should be lifted with more money in super, adding dignity in retirement requires a decent retirement income.
There are around 270,000 age pensioner households on rent assistance and giving each of them the additional rental assistance proposed by Grattan would cost only around $140 million a year, he noted.
“Such a measure is affordable within the overall budget context and should be considered on its own merits,” he said.
“The age pension and rent assistance alone cannot provide an adequate or acceptable retirement for Australians – the paper missed the reality of retirement living costs in Australia and the aspirations of the community to live comfortably, not just survive, in retirement.”
He also highlighted the Grattan paper reduced wage determination to a simple trade-off between super and wage increases.
“This is an oversimplification. Furthermore, in the current wage bargaining environment, it is unlikely that foregone SG increases would translate directly into wage increases,” he said.
“Grattan’s goal is really all about saving budget money in the short term. It ignores critical intergenerational challenges facing Australia.
“Their solution to closing the gender gap is to make most people worse off in retirement by slashing tax concessions and to rip $4 billion from individuals.”
He said most Australian retirees would be concerned by the proposal that earnings from super balances in retirement should be taxed at 15 per cent and the last thing retirees want is a new tax when they are already facing increasing aged-care and healthcare costs.
Responding to Grattan’s recommendation to halt the SG rate at 9.5 per cent, Australian Institute of Superannuation Trustees chief executive Eva Scheerlinck said this would deny most of the population an adequate income in retirement and also lead to higher age pension costs for taxpayers.
The SG is legislated to rise to 12 per cent by 2025/26, which represents a significant delay of several years on previous timetables supported by former Labor governments, Scheerlinck noted.
She agreed with Grattan that low-income earners, particularly women who did not own a home, faced the greatest risk of poverty in retirement, but said leaving the SG at 9.5 per cent was not the solution.
“Women who have been low-income earners throughout their working life and don’t own a home should not have to choose between housing security and an adequate income in retirement,” she said.