Savings under the current superannuation system will not be able to sustain some retirees as more people live well into their 80s and 90s, former prime minister Paul Keating has warned.
Mr Keating, whose government crafted Australia’s superannuation system, has called for a government-backed, national insurance scheme to help fund people who outlive their savings.
“When the superannuation system was designed 32 years ago, people retired at about 65 or 66 and died at 81,” he said at a super fund forum Tuesday, organised by Visy Industries and Fairfax Media.
“We are now living nine years longer. Accumulation at 9.5 per cent of average weekly earnings can’t be stretched out to cover that longevity. We have no policy here in Australia for the 80 to 100 cohort.”
Under the proposed insurance scheme, the “national family” would wrap its arms around the elderly to guarantee them an income, healthcare and accommodation, the Australian Financial Review quoted Mr Keating as saying.
Mr Keating’s comments came as Dr Martin Fahy, chief executive of superannuation industry research and advocacy group ASFA, told The New Daily that Australia’s retirement system is “still right up there” with the world’s best.
Prime Minister Scott Morrison last month dropped a plan to raise the pension age to 70.
Dr Fahy said raising the superannuation guarantee to a 12 per cent contribution from the current 9.5 per cent would help support Australians during retirement.
But Mr Keating told the forum he doubted the current superannuation system would be sufficient for many retirees, even if the compulsory contributions were raised to 12 per cent.
“I don’t believe that it should be left to superannuation. I think it should be a national insurance scheme. Only the commonwealth can insure across generations,” he said.
Mr Keating said his proposal for a national insurance scheme needed the federal government to offer a “calibrated” product to help people meet the costs of aged care, accommodation and other expenses.
He said insurance fund members who died early would help pay for those who lived longer.
“This is where I think in a real national family, the government puts their arm around them, the community puts their arm around them, and carries them through the rest of their life,” he said.