While welcoming the budget changes, the Government needs to do more to increase superannuation savings particularly for younger generations, two industry stalwarts said.
"Australia has a world class superannuation system, but there is still a need for more improvement," economist Don Stammer told an audience at an Association of Superannuation Funds of Australia (ASFA) briefing yesterday.
The 9 per cent superannuation contribution is still too low. The Government should perhaps look at allocating its budget surpluses to individual's superannuation accounts. That way the lower income earners are better targeted, Stammer said.
Younger generations do not put more into superannuation and so more needs to be done to encourage this group to save more toward their retirement, he said.
The budget's co-contribution measure will improve a person's level of retirement savings, but it is not expected to have a material impact and more importantly it does not do anything to encourage increased savings in the future, Watson Wyatt, managing director Andrew Boal said in a budget statement yesterday.
Watson Wyatt has advocated the soft compulsion scheme and increasing the income level make more people eligible for the co-contribution measure.
"Soft compulsion can provide people with the choice of increasing their superannuation savings with the option opting out of the scheme," Boal said.
Soft compulsion allows a person to voluntarily put an extra percent of their pay into superannuation each time they receive a pay increase or change jobs.
"Extending the co-contribution for people earning $50,000 or higher would be another initiative to help improve the retirement savings for more Australians in the near term," Boal said.
