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ANU study on SG ‘a fantasy’: ISA
Industry Super Australia (ISA) has criticised an Australian National University (ANU) study on the superannuation guarantee (SG).
The study questioned whether it was necessary to lift the SG to 12% from 9.5% as lower-income earners would have less money during their working lives, and would extend overly generous tax breaks to the wealthy.
ISA said the researchers had created a “fantasy world where every Australian is a single man who is in the workforce for more than 40 straight years”.
It also said the fantasy man never ran a business, got injured or had illness that forced him out of work, made redundant or had a study break.
“Women do not exist and no parent takes time out of work to raise children,” ISA said.
“Australia’s 3.9 million casual or part-time workers would be shocked to learn that the ANU researchers have modelled them out of existence. There is no savings other than super – no family homes, investment properties, shares or bonds.”
ISA said the model did not include unpaid super and said the research’s scope of analysis was so limited that “no meaningful conclusions could be drawn from it. Let alone the dangerous recommendations it makes which would lead to millions of Australians flooding onto the pension, leaving everyone to pay in the long run”.
ISA chief executive, Bernie Dean, said the results had no benchmarks to reality, were flawed and misleading.
“In this fantasy world women and children don’t exist and it assumes all men work continuously for more than 40 years and have no assets outside of super,” he said.
“It draws dangerous conclusions - if implemented millions of Australians would be left struggling to make ends meet on the pension, or forced to work until they drop.”
ISA said the only way Australians would have dignity, choice, and control in retirement was to increase the SG to 12%.
Other issues ISA found with the research were:
- Everything is indexed by the same percentage;
- With no women or children in the world, there is no need for family tax benefit with a means test which counteracts different wage movements;
- There is no test of whether any assumptions hold in history or that the balances produced by the model benchmark to reality; and
- They optimise for the replacement rate of the first five years of retirement to the five years of working life when they have their lowest wage. This is not reflective of what actually happens and generates biased results.
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