The Association of Superannuation Funds of Australia (ASFA) is urging the Federal Government not to step back from its budget announcement that it will gradually increase the Superannuation Guarantee (SG) to 12 percent.
"The government has noted in its budget papers that the cost of increasing SG to 12 percent in the year 2013-14 is $240 million. In the overall scheme of things, this is a great example of money that should be spent today to reap rewards in the future," ASFA chief executive, Pauline Vamos said.
"The government has been prudent in proposing to introduce the increase over a long period. This gives all parties enough time to build the increase into wage and salary discussions."
She said that a government inter-generational report, released earlier this year, highlighted that we are living longer and that the percentage of GDP spent on health and ageing will increase.
"It reported that instead of five people working to each person retired there will only be 2.7. This is our world in 2050," Ms Vamos said.
"To address this, we need to increase population, productivity and participation in the workforce, but we also need to recognise that we have an ageing population who must be our consumers of the future. They need enough money to live an active and healthy life in retirement.
"Increasing SG from 9 to 12 percent is a low-cost, long-term measure to achieve this."
Ms Vamos said an increase to 12 percent would make a significant difference to retirement outcomes.
"For a person 30 today, earning $50,000 a year and with a current super account balance of $23,000, their lump sum on retirement will increase from $300,000 to $385,000 with the move to 12 percent SG."
ASFA research, conducted by Auspoll, shows that over two thirds of Australians believe that the 9 percent superannuation guarantee is not enough to fund an adequate retirement.
Ms Vamos said there was continued evidence of support for increasing SG, pointing to the announcement today by Westpac that it would pay SG on paid parental leave contributions for its workforce.
"We believe the increase in SG is of paramount importance and this should remain the central plank of the government's superannuation policy," she said.
