ISA has hit back at research from the Grattan Institute that indicated Australians would still have positive retirement outcomes if they withdrew their super early as a higher aged pension would offset some of the cost.
“Anyone saying it’s OK for the lowest income earners to lose more than $3,000 a year in income because the pension is more than enough for them is simply out of touch,” said ISA chief executive Bernie Dean. “Lifting the super rate is the only realistic way for the millions who have accessed their super early to make up lost ground before they stop working.
“Workers will need every cent they’ve been promised in super given that we’ll all be shouldering the burden of debt that the government has had to take on to support the nation during the crisis.”
ISA noted that Grattan’s modelling assumes everyone retires as single – which would entitle them to a higher rate of pension than each member of a couple – and “vastly inflates” the value of the pension relative to community living standards.
It also assumes that all workers continuously receive the full superannuation guarantee despite research indicating one in three eligible workers are being underpaid super entitlements.
“The bleak outcome is still evident despite Grattan’s retirement income modelers relying on some highly questionable assumptions about the adequacy of retirement incomes before COVID-19,” ISA said in a statement.
The organisation also warned that Grattan’s research confirmed some of its projections about the cost of the early super scheme – primarily, that it would disproportionately impact low-income earners and leave a generation “languishing” on the pension – while slamming its calls to freeze the legislated increase to the super guarantee.
“Grattan’s out-of-touch solution to this looming crisis for millions of Australians is to take away the one thing that can boost retirement savings – the legislated super guarantee increases,” ISA said. “Ditching the super guarantee increase would cost every average couple up to $200,000 in today’s dollars from their retirement. It is even more dire for those who took out $20,000 via the early release scheme.”
