Grattan SG claims slammed by industry bodies

Peak superannuation bodies have forcefully rebuked the Grattan Institute's recent claim that middle-income workers would be worse off if the Superannuation Guarantee rose to 12%.

Industry Super Australia and the Association of Superannuation Funds of Australia have called out the research house, with ASFA chief executive Martin Fahy going as far as to label the institute "tedious."

Fahy said the institute's latest "missive" on retirement funding continued its pattern of "selective and misleading modeling that seeks to undermine a retirement system that is globally acknowledged as on of the best in the world."

"Good public policy will always benefit from lucid, rigorous research and modelling. However, the Grattan Institute's latest output is based on unsound assumptions regarding average earnings, working patterns, the future rate of the Age Pension, how the means test for the Age Pension works, and most importantly working Australians' aspirations for a dignified retirement," Fahy said.

Grattan's analysis claimed a 30 year-old worker would be forced to pay an additional $30,000 over their lifetime if the superannuation guarantee moved to 12% as is currently legislated.

But ASFA shot back, saying the analysis involved several incorrect assumptions, including that not increasing the superannuation guarantee would lead to a 2.5% wage increase which would flow through to individuals in full.

"In reality, the increase in personal tax, withdrawal of family tax benefits and child-care subsidies would erode most of the increase, leaving people no better off in working life and worse off in retirement," ASFA said.

The association also pulled apart Grattan's assumption that increasing the SG to 12% would not make a difference to retirees, noting that for a person earning $60,000 a year (roughly Australia's median wage) would be $69,000 better off in retirement.

"This will boost retirement income from $38,900 a year to $40,950 a year according to ASIC's Moneysmart calculator, an increase of 5.3%," ASFA said.

Industry Super Australia also hit out at Grattan, and said the institute had "been caught out contradicting itself" in its attempts to undermine the Superannuation Guarantee.

"Despite releasing research only a few weeks ago that claimed increasing the super guarantee to 12 per cent would not ease the burden on the age pension, today they are claiming that an increase will leave workers poorer, because it will reduce the amount they are entitled to through the pension," ISA said.

"Both can't be true. Not only does one completely contradict the other and make a mockery of the claims, the modelling Grattan relies on to peddle these myths is deeply flawed."

According to ISA, Grattan's modelling overstates the effect of the SG on wages, pension indexation and taxation "and assumes women, low-income and self-employed workers don't exist."

ISA acting chief executive Matthew Linden said Grattan's arguments were obsolete in light of their contradictions.

"One week they're claiming an increase in super won't reduce the age pension, the next they claim people will be worse off because they will miss out on the age pension if they retire with more money," Linden said.

"Both can't be true. This proves their analysis simply doesn't stack up. Despite this, they continue to use deeply flawed modelling to peddle incorrect and misleading claims about the superannuation guarantee.

"Any attempt to wind back the proposed super increase or freeze it altogether would not only affect Australians' quality of life at retirement, it would increase the burden of the age pension on the budget."

Read more: Age PensionSuperannuation GuaranteeASFAGrattan InstituteISAAustraliansIndustry Super AustraliaMartin FahyAssociation of Superannuation Funds of AustraliaMatthew LindenASICMoneysmart
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