Su­per re­port un­der fire

Business First - - NEWS -

In­dus­try Su­per Net­work (ISN) has ex­pressed con­cern at the pub­li­ca­tion of the CPA Aus­tralian re­port “Twenty years of the Su­per­an­nu­a­tion Guar­an­tee: The Ver­dict”, say­ing it is ir­re­spon­si­ble.

ISN Chief Ex­ec­u­tive, David White­ley, said the method­ol­ogy of the re­port was flawed and the cen­tral premise that su­per has trig­gered an ex­plo­sion in house­hold debt con­tra­dicts the Re­serve Bank of Aus­tralia.

“The re­port in­cor­rectly sug­gests that in­creases in house­hold debt are ex­plic­itly linked to the in­crease in su­per­an­nu­a­tion sav­ings,” Mr. White­ley said.

“This ig­nores ev­i­dence that house­hold debt has in­creased in al­most ev­ery ad­vanced econ­omy ir­re­spec­tive of their re­tire­ment in­come sys­tems.

In 2010 the Re­serve Bank Deputy Gover­nor Ric Bat­tellino, noted: “The cur­rent house­hold debt ra­tio in Aus­tralia is sim­i­lar to that in most de­vel­oped coun­tries... All coun­tries have ex­pe­ri­enced rises in house­hold debt ra­tios over re­cent decades...Clearly, there­fore the forces that drove the in­crease in the house­hold debt ra­tio were not unique to Aus­tralia.” ( RBA Bul­letin Septem­ber Quar­ter 2010)

Mr. White­ley also said the re­port over­stated the rise in house­hold debt to house­hold as­sets (in­clud­ing su­per) by ex­clud­ing the value of hous­ing as­sets worth $4.2 tril­lion.

“The re­port flies in the face of clear ev­i­dence that home own­er­ship sig­nif­i­cantly im­proves re­tire­ment out­comes.”

Mr. Whitely cites other ben­e­fits of the su­per sys­tem. He says, “The Su­per Guar­an­tee will in­crease dis­pos­able in­come af­ter re­tire­ment and re­duce pres­sure on the age pen­sion.

“When ma­ture the su­per­an­nu­a­tion sys­tem com­bined with the age pen­sion will de­liver re­place­ment rates of around 80% of pre-re­tire­ment in­come for av­er­age earn­ers with su­per de­liv­er­ing 50% more in­come than the full age pen­sion alone.

“In re­spect to re­duc­ing re­liance on the age pen­sion, su­per has been a fac­tor in re­duc­ing re­liance on age pen­sions with the pro­por­tion of part-rate pen­sion­ers in­creas­ing from 31.9% in 1999 to 40.2% in 2011. Trea­sury has es­ti­mated as the sys­tem ma­tures, part rate pen­sion­ers will ex­ceed full rate pen­sion­ers by around 2035.”

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