Superannuation will fail to meet the long-term retirement needs of many people and the sector needs to run a campaign informing members how far their current super guarantee contributions (SGC) will go in retirement, according to a government senator.
New South Wales Liberal Senator Andrew Bragg said current projections of retirees reliant on a government pension into the future still remained too high despite compulsory contributions being made via the SGC.
“What has troubled me for a long time, is the [2015] Intergenerational Report says we will still have 70 per cent of people on the pension in 2050 when we should be getting that down towards 50 per cent,” Bragg said as part of a recent Financial Services Council webinar.
“Part of the objective we should have for the superannuation scheme is that we should have a target of what proportion of the population should be self-funded.”
He said that despite the current superannuation system having no set objective, it should have higher targets for those no longer reliant on the pension.
“We should be more ambitious. If we are going to put around 10 per cent of people’s salary or wages into superannuation, we want to see at least half the population off the pension. If they want to have more super, we need to increase the ambitions around the scheme,” he said.
He put forward the proposal of a ‘truth campaign’ to provide outcomes based off current levels of SGC input to push debate and discussion around pension reliance in the future.
“The super industry would pay for a campaign that will state ‘this is what 9 per cent of super will do for you and you need to contribute more if you want to be self-funded’,” he said.
“There is a misnomer, and especially in some of the shocking advertising that is trying to scare people, where you get the sense that you will have so much super in retirement you will not know what to do with it.
“The fact is if the average balance is $150,000, which is only three to four years of age pension, I want to see some truth in advertising and some truth telling about what the super scheme is actually going to do. This will improve the quality of the conversations we have in Canberra and beyond.”
He also praised the SMSF sector for its lack of failures compared to the retail and industry fund sectors and its ability to serve the needs of fund members.
