Saturday , October 1 2022

The Grattan plan would reduce pension balances


The cancellation of the planned increase in the guarantee, which would increase it from the current 9.5% to 12% of wages, would, according to the new survey, reduce the average Australian retirement by $ 89,589.

SuperAustlan Industries (ISA) found that at three average revenue levels, $ 50,000, $ 80,000 and $ 100,000, which would not raise the above-average contributions paid by employers from current levels, Australian retirees would be between 11.2% and 12.1% of the final balances. Dollar balances would have been reduced by $ 56,393, $ 89,589 and $ 108,178.

During retirement, aged between 67 and 91, a reduction in real spending on pensions would be between $ 28,310 and $ 34,566, as the chart shows. These data are lower than the final decrease in the balance, as they include interactions between super and retirement earnings. The ISA's work was conducted in response to research by the Grattan Institute, which claims that Australians are pretty cool and now do not need a planned SG increase between 2021 and 2025.

It also requires cuts at supercomputer levels, taxing all income from funds, including a family home in a retirement asset test, and raising the retirement age to 70 years.

Ian Fryer, chief of research with superannuation Wat Chant West, said he did not think that 9.5% SG would be enough.

"Our own research suggests that many people will fight and that 9.5 percent would not be enough," said Mr. Fryer.

Women and low-income workers would suffer

Australian Chief Executive Australia's Association of Superannuation Funds, Martin Fahy, accepted the exception from the Grattan report, saying it would lower the prospects for retirement for people with lower incomes by reducing their super.

"This report is about two Australians where people with high earnings are fully retired, and others rely on the state," Dr. Fahy.

Its introduction would prevent lower-income workers from achieving a reasonable level of financial independence, he said.

"The Grattan Institute wants to dismantle our system of financing the pension system on a world level and replace it with a model that has two-thirds of the population who rely on the pension system," Dr. Fahy.

"In a world where work patterns are disturbed and where women are 40 percent less balanced than men, Grattan wants to leave large parts of our society exposed to retirement poverty.

"It would be a world where few people can afford health insurance, and where retirement is a terrible repetition of the 1950s."

Only a few can afford voluntary replenishment

Phil Gallagher, a retirement officer with Industry Super Australia, said Grattan modeling had no relation to the typical experience of those who rely on SG by overestimating their financial capacity.

"In all age groups, only 12.2% of employees are super-awarded, but Grattan seems to suppose everyone is doing it," said Mr. Gallagher.

"This leads to a burdening of contributions and a significant increase in the retirement balance. The adopted methodology seems to reduce contributions especially for people with lower incomes, resulting in retirement projections that can be overstated by up to 45 percent."

Retirement is scary

Robert Curley, a lawyer at the Association of Independent Retirees, said that Grattan's assumptions did not take into account the whims of life and their impact on finances.

"It is right to do these calculations, but things may not change," Mr. Curley said.

"I've been retiring for 13 years and still scares me, even if you own a house, you can save $ 15,000 or $ 20,000 for maintenance and you have to buy a car."

He said that people often have to spend a considerable amount of retirement money to settle, and that "a retirement income policy really needed a pragmatic view."

Independent economist Saul Eslake stated that he "really found Grattan's argument reasonably convincing" and that he changed his opinion as a result of reading.

The current SG would bring enough pensions for many people, and "the purpose of super is not to transfer a great heritage or to help them get lost better."

New Journal is owned by Industry Super Holdings

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