In its submission to the Tax Review, Industry Super Australia (ISA) has forecast that close to 50 per cent of Aussies retiring from now to 2055 will not have the income necessary for a comfortable retirement.
The findings, which ISA gathered using Rice Warner, revealed an average 63 per cent of Australia’s single women will fall under the comfortable retirement standard, along with 50 per cent of the nation’s men and 45 per cent of couples.
The research classified “comfortable” as the budget needed by “an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living”.
“One of the main causes is poorly targeted tax breaks on superannuation, which are now wildly out of balance between high income earners and those on medium to lower wages,” CEO of Industry Super Australia David Whiteley said.
“Our analysis of retirement incomes shows current tax breaks flowing to the top 1 per cent of Australian income earners will more than double their retirement income. Perversely, the lowest paid Australians, who receive no tax break, suffer a 14 per cent reduction in their superannuation income.”
The gap between high earner and low earners is forecast to worsen. The income earned by the top 1 per cent of couples retiring in 2055 is estimated to be almost 10 times more than that earned by couples at the low end of the income scale, a finding that Mr Whiteley said is “clearly inequitable and unsustainable”.
If the pension asset test is tightened, as has been proposed, the findings estimate that a staggering 80 per cent of single women will no have enough to retire comfortably.
The ISA suggests 3 measures that need to be enforced:
- “Re-calibrating superannuation tax breaks,
- Raising the Super Guarantee to 12 per cent,
- Re-instating the Low Income Superannuation Contribution.”
“For a fair and efficient outcome, this would be a starting point. More will need to be done to restructure the retirement system to make sure as many Australians as possible can enjoy a comfortable standard of living after a lifetime of work,” Mr Whiteley said.