Retirement savings gap widens

The Federal Government could help its Budget bottom line and reduce the current account deficit if it moved promptly to lift the superannuation guarantee from its current 9 per cent to 12 per cent, according to new research released by the Financial Services Council.

The research has confirmed the bad news that Australia’s retirement savings gap has worsened over the past two years — growing by nearly $200 billion.

The research, undertaken by actuarial consultancy Rice Warner, has revealed the retirement savings gap has blown out considerably from $695 billion in 2008 to nearly $900 billion last year.

Commenting on the data, Financial Services Council chief executive John Brogden said the research had confirmed that the 9 per cent superannuation guarantee would fail to meet expectations of a comfortable retirement.

“The superannuation guarantee needs to be at least 12 per cent,” he said.

“This, combined with the Government’s plan to raise the concessional contribution caps for those nearing retirement and the superannuation guarantee age limit, would provide a 30-year-old on average weekly earnings with an additional $108,000 in their superannuation account on retirement,” Brogden said.

He said that increasing compulsory superannuation also had the significant benefit of reducing Australia’s reliance on international investment and lowering the current account deficit and providing a cheaper and more stable pool of funds for Australians to draw on.