POWERED BY MOMENTUM MEDIA
RIR 'rigged' to cut superannuation
The Retirement Income Review (RIR) was ‘rigged’ towards a pre-determined outcome that would support the Government’s plans to cut Australians’ superannuation, according to Industry Super Australia (ISA).
ISA said the RIR use unrealistic modelling assumptions that pumped up the annual retirement income of a median earner by over 40%, claiming the median earner would retire with about $40,000 annual income a year if the super rate was kept at 9.5%. Other modelling suggested the average annual retirement income would be just $24,000 as a member of a couple.
ISA deputy chief executive, Matthew Linden, said: “The Retirement Income Review adopted objectively wrong assumptions for their base case that vastly inflates retirement outcomes – the troubling conclusion is that the review was rigged to get an outcome the Government wanted.
“Some sensitivity analysis was undertaken which point to the problems, but this was excluded from the base case and some impacts were materially understated.
“Modelling based on wrong assumptions has real life ramifications, some wish to use the Retirement Income Review’s findings to cut super for millions who otherwise wouldn’t save enough for retirement.
“This would be a terrible outcome as a more realistic working life pattern shows the current super rate is not adequate for most women, low and middle-income earners to fund a secure retirement.”
ISA said the “only conclusion” was that the review worked towards a pre-determined outcome that would support plans, since flagged, to cut working Australians super, and potentially force retirees to sell their home to make up the shortfall.
ISA noted the review also used assumptions that showed an inherent gender bias as it assumed that all workers received super contributions for 40 years, despite the fact that 75% of women would not and 61% of men would not.
ISA said the RIR’s base case assumptions included:
- Assigning the entire population continuous 40-year working-life;
- The assumption that all income cohorts make additional contributions via salary sacrifice;
- The assumption all benefits are preserved until retirement and ignoring impact of COVID early release;
- The assumption of no debt at retirement;
- The use of consumer price index (CPI) deflator to discount retirement income (including the wage indexed pension);
- The use of an inflexible drawdown of assets that doesn’t reflect observed behaviour or the prudent need for some precautionary saving; and
- The focus on single person cameos rather than couples which boosts the value of the aged pension.
Recommended for you
The superannuation industry will be judged by its member services rather than how effectively it accumulates wealth, according to Stephen Jones.
The profit-to-member super funds are officially operating as a merged entity, set to serve over half a million members.
Super Review announced 21 winners at the annual Super Fund of the Year Awards, including the recipient of the prestigious Fund of the Year Award.
A research firm has given UniSuper a glowing review, praising its strong leadership and “compact team”, as well as its “creditable governance” structure.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
32.57 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
32.09 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
27.42 3 y p.a(%)
