Finance Your Super Superannuation changes won’t ‘cut it’, Paul Keating warns

Superannuation changes won’t ‘cut it’, Paul Keating warns

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Paul Keating has grave concerns about Australia's current approach to China. Photo: Getty
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The architect of Australia’s superannuation scheme, Paul Keating, has warned that an increase to the super guarantee will “barely cut it” as he continues his push for a longevity levy for over 85s. 

Despite calls for debate over the wisdom of increasing the nation’s super guarantee to 12 per cent for employer contributions, Mr Keating said it was clear not all retirees had saved enough because Australians are living longer. 

“It should be at 12 per cent. That’s for the 65s to 85s,’’ the former prime minister told the ABC’s 7.30

“When I designed super, people retired at about 65 and died at about 85. But your children, and my children will probably now live to 100 or 105, the pool of money runs out at about 85,” he said.

“Once you get into your nineties and ‘noughties’, there is nothing to support you but your basic pension, what I believe we should have is a longevity levy, not superannuation, but a national insurance scheme, a modest levy, like the Medicare levy.”

Mr Keating has slammed the Grattan Institute for urging retirees to “eat their house” as a super strategy.

“This is where  (Grattan Institute’s) John Daley doesn’t get it with his miserable view of two Australias,” he said.

“The privileged Australia where people can have all sorts of assets, but ordinary people are condemned to the pension. That’s $460 a week. I mean don’t whoop it up on 460 bucks a week!”

For low income workers, there has also been debate over whether they should be able to choose a pay rise delivering money in the pocket now rather than an increase in the super guarantee. 

“What I had intended and what we are seeing is that we have a new community standard. Daley is recommending people work until 70, put your house in the asset tests whereas now it isn’t and eat your house. Eat your house. At some stage in your life find yourself with no assets,”he said. 

Mr Keating noted Industry funds are not-for-profit funds and he predicted the Royal Commission into the banks would have more to say about the retail funds.

It follows CBUS chairman Steve Bracks’ claim that the banking royal commission had delivered a windfall to industry funds as disenchanted customers injected $1 billion into the sector.