The compulsory superannuation contribution should be frozen at 9.5 per cent to encourage Australians to consider more flexible options to save for retirement, according to a report out Monday.

The Grattan Institute said the Federal Government should reconsider lifting the compulsory contribution to 12 per cent, warning that a focus on superannuation alone will not necessarily provide an adequate or comfortable retirement.

The study argued it is a mistake to confuse superannuation with retirement savings given that, on average, superannuation only accounts for 15 per cent of household wealth.

Grattan Institute chief executive John Daley told the ABC’s The World Today program that the importance of superannuation was “overblown”, and an increase to 12 per cent ignores modelling about the way people really save.

“If we do go to 12 per cent we will be forcing many households to in effect live less prosperous lives while they’re working,” Mr Daley said.

“I think it’s quite possible that we might see a government rethink the currently legislated increase to 12 per cent. It’s already been delayed a number of times so it’s possible we might see that rethought.”

The study comes as superannuation remains a hot political issue, with the Federal Government negotiating to convince the Senate to approve reductions in tax breaks for super contributions.

The Grattan Institute research is also likely to anger the Labor Opposition, and former Prime Minister Paul Keating, who advocate a 15 per cent compulsory contribution as critical to retirement planning.

But Mr Daley said the 15 per cent argument underscores the confusion in the national debate between superannuation and alternative retirement savings.

“It needs to be around 15 per cent if you assume people don’t save outside, and that’s just not true,” Mr Daley said.

Mr Daley said there were vested interests in the superannuation sector — both retail and industry funds — who would immediately oppose the report’s findings.

He also agreed taxpayers were rightly cynical about superannuation policy, given the politicisation of retirement and super tax breaks.

“It’s no surprise that people don’t trust government not to change the rules,” Mr Daley said.

“But I think it’s also perfectly rational for people to have some of their savings where they can use it before they turn 65.”