Part one of the 7.30 Report’s series on superannuation reviews the system and considers an important point – will your super be enough to retire on?
According to archival footage, probably not. Paul Keating, the architect of superannuation, is on the record saying:
For an adequate and mature level of contribution to be established, I suggest that by the year 2000 we reach a national benchmark where each and every employee has a contribution to superannuation equal to 12 per cent of wage and salary income paid into his or her superannuation account.
Compulsory superannuation remains at 9.5% and is not legislated to reach 12% before 2025. Of course, this won’t help those people already retired.
Take Peter. He’s living off a small amount of superannuation and still paying off a mortgage. He can’t afford to use his super to pay out his mortgage and live on the Age Pension.
Peter’s situation is quite typical in that he worked through a period where he wasn’t earning superannuation and then went into employers, several employers that paid superannuation but he was never interested in his superannuation. It always just happened.
Professor Susan Thorp of Sydney University Business School believes for people to become entirely independent in retirement, they need to contribute to super at a rate of about 18 percent. Importantly, this needs to start at the beginning of their working life and continue until retirement. Something, she believes, many people are not prepared to do.
For many retirees, super was too little, too late. If, like Peter, you’re struggling to fund the retirement you want, watch this video to see how Household Capital could help you.