Former prime minister Paul Keating has renewed calls for what he says should be “superannuation phase two”, where the Government acts as an insurer for the nation’s ageing.

Speaking at the launch of a new think tank in Sydney, the architect of Australia’s superannuation scheme also said super contributions needed to be lifted to 12 per cent if Australians were to live comfortably in old age.

Mr Keating said he had abandoned his belief the rate should get up to 15 per cent of wages but said it had to be at least 12 per cent if people were to live each year on 70 per cent of the annual income they earned in the year before retirement.

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“To have it less than 12 per cent is a piece of economic vandalism,” he said.

Mr Keating said the ageing population combined with low government bond yields meant the current superannuation system would not be sufficient to look after people as they aged.

Under his superannuation phase two proposal he called for the Government to impose a levy of up to three per cent on the workforce to act as a long-term insurer for the ageing.

“You can’t expect to have 35 years of [wealth] accumulation and have it last 35 years after that,” he said.

“Yields are going to come down and superannuants are going to have to search further for risk.”

The Commonwealth Insurance Longevity Fund would mirror the Medicare levy and Future Fund and would cover incomes, housing and healthcare for the elderly.

Under the suggestion the contributions of those who died young would effectively supplement those who lived longer.

“This is a classic job for insurance. The Commonwealth can insure across generations and pool risk,” Mr Keating said.

“The Commonwealth is the default insurer anyway through the aged pension.”

Mr Keating was the keynote speaker at left-wing think tank Per Capita’s launch of its Centre for Applied Policy in Positive Ageing.

The speech included the verbal flair the former PM is known for. He called the Australian Chamber of Commerce and Industry “fundamentally a blight on society”, described the Treasury department as a “gang that can’t shoot straight” with “absolutely no imagination”.

The current approaches to superannuation were described as “tom foolery” and a “wilful subjugation of a national project”.

“This is all about ‘the budget can’t afford it’,” he said.

“Well it’s the budget being able to afford pensions in 30 years’ time which is being diminished.”

He said superannuation was always designed for middle- and lower-income people to accumulate wealth.

“It always got up my nose that super existed for the wealthy, executive class and not much in between for ordinary men and women,” he said.

“The key to wealth is compound earnings.”

-ABC