Keating Strikes Again! - SG rate should be 15%

The former Prime Minister Paul Keating has again expressed his view that the Superannuation Guarantee rate should be increased from the current 9% to 15%.  Additionally, he suggested that there should be a greater emphasis on requiring super benefits to be taken as income streams.

The former PM could not resist providing his assessment of the Costello Simplified Super reforms: as simply permitting super to be fritted away on non-retirement income purposes such as discharging debt and travel – in his own words, the former PM summed up the changes as a “bag of lollies”.

In our view, the former PM is on the money:  the principal policy issue about super is the contribution rate. 

A 9% contribution for a 40-year working period will generally not provide a super balance which will support 20 or 30 years of retirement income at levels comparable to pre-retirement salary. 

In any event, the 9% contribution rate is the gross rate; many super members do not have sufficient imputation credits to offset the effect of the 15% tax on deductible contributions, so the position is even less satisfactory.

Surprisingly, the former PM did not comment upon the Coalition’s low point of super policy – the superannuation contributions surcharge.