SG increase reignites superannuation debate

While our super system may be the envy of much of the world, the Superannuation Guarantee finally hitting 12% has seen some renew calls for the mandatory system to be scrapped as Australians continue to struggle with the cost of living.

- Matthew Wai

A recent survey from Super Members Council found about 79% of Australians aged 50 and older see super as 'very important' to their retirement, while 70% said they would not have saved enough for retirement if it weren't mandatory.

However, Fresh Thinking Economics chief economist Cameron Murray argues that people shouldn’t be “young and poor, and old and rich”, something he says the system enforces.

"[Super is] successful at amplifying wealth inequalities and making older people disproportionately richer than younger people historically - I don’t know if that’s success but that’s what it’s done,” Murray says.

“We've got this system that’s not quite mature but is already exposing that a typical person in their 60s and 70s with a lower rate of super is richer than the typical person aged 45 and below, and yet we’ve just changed the compulsory contribution from 11.5% to 12%.”

Murray says the younger generations need that money more right now than they will when they reach retirement.

“We're making those families give up 12% of their income so they can be richer when they’re old, and still receive the Age Pension... We should have some coherent standard or expectation,” Murray continues.