Pearce argues for soft compulsion in super

Soft compulsion needs to be encouraged in order to deal with issues of adequacy in super, according to the shadow minister for financial services, Chris Pearce.

Speaking at the Association of Superannuation Funds of Australia conference, Pearce called on the Government to implement a soft compulsion superannuation system, saying that such a move would be a natural extension of current policy.

Many Australians had not been working with the super guarantee for their entire working lives, and a system such as soft compulsion would be needed to boost their retirement savings, he said.

Such a system would also overcome the apathy of most working Australians towards their super without increasing the financial burden on businesses, he said.

A soft compulsion system of 3 per cent would represent a better outcome for those Australians who were within the “soft system” but not contributing to their own superannuation levels, and would add to national retirement savings without diluting the choice of the consumer, he said.

The Tasmanian public service and New Zealand had proven that a soft compulsion system could work, Pearce said.

Inertia in superannuation would remain until the Government implemented such a system, he added.

Pearce also warned that short-term revenue decisions, such as reducing the contribution amounts, were dangerous in the long term.

Pauline Vamos, chief executive of ASFA, said a soft compulsion system for super had been a policy of ASFA for some time.