Super report under fire
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.”