Australia is headed for a retirement savings disaster, with increasing numbers of retiring baby boomers resorting to the aged pension, having largely spent their superannuation at, or shortly after retirement to pay off debt, a CPA Australia study has shown.
The study points to a scenario with a serious impact on Australia’s budgetary bottom line, accompanied by far-reaching economic and social consequences.
CPA Australia has called on the Government to consider a major overhaul, with the lump sum payment system in particular, “a problem in need of fixing”. The study shows that compulsory superannuation, 20 years after introduction, has had a minimal impact on Australians’ capacity to save for a self-funded retirement.
The study also shows that the Super Guarantee system has not predicted changing work and demographic patterns that have left certain groups, especially those with interrupted work patterns (such as women and casual workers) at a distinct disadvantage. Further, the study suggests compulsory superannuation appears to have had the effect of reducing other forms of household savings.
CPA Australia CEO Alex Malley said the study was “a stark illustration that the superannuation system, as currently configured, has failed miserably in its aim of encouraging more Australians to save for retirement. Many who have spent a large portion of their working lives under this system will still be relying on the pension.”
Source: CPA Australia release, 3 October 2012
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