Proposed Superannuation Guarantee allows Australians the right to choose when to retire, says FPA
“An increase in the Superannuation Guarantee and encouragement to seek professional financial advice is needed to enhance the quality of life during retirement, ensure income adequacy, reduce longevity risk and decrease reliance on the age pension for Australia’s ageing population,” said Mark Rantall, CEO of the FPA.
“Without an increase in the superannuation guarantee, Australians will need to extend their working life to be able to retire on an adequate income, or will have to rely on the age pension. By 2047, ten years after maturation of the superannuation guarantee system, 75 per cent of the population will still be on some form of the age pension. It is critical that this national issue is addressed now.”
The leading professional body for financial planners supports the gradual increase of the Superannuation Guarantee contribution level to 12 per cent over ten years.
“The Government’s proposed gradual increase over a ten year period, with initial increments of 0.25 percentage points on 1 July 2013 and 1 July 2014; and further increments of 0.5 percentage points annually up to 2019-20, will reduce pressure and minimise impact on the economy.”
“The FPA supports the Government’s proposed legislation to extend the Superannuation Guarantee to those aged over 70 as it will support all workers and not discriminate against an ageing workforce. All working Australians are entitled to receive superannuation and the proposed Superannuation Guarantee allows Australians the right to choose when to retire.”
The FPA welcomes all initiative encouraging consumers to shift to a savings culture, ensuring all Australians are better prepared for retirement.
Addressing the importance of this shift, Mark Rantall said “Government policy should encourage all Australians to accept responsibility to save for retirement. If our savings behaviour does not change, household debt will increase even further and more people will enter retirement with sizeable debt and will need to rely on the age pension at an earlier age. Initiatives such as the proposed Superannuation Guarantee, and working with a qualified financial adviser will ensure all Australians are better equipped for a comfortable retirement.”
Debate on the legislation is expected to be adjourned and re-started at the next session of parliament on 21 November.