Australians overwhelmingly feel unprepared for retirement amid government tinkering in the superannuation system.
New research, commissioned by financial advisers MLC, finds just one in six Australians are confident about their retirement nest egg.
About two-thirds believed they were unprepared financially for retirement.
This was despite Australia’s incredibly strong superannuation savings system, MLC’s superannuation and investments manager Paul Carter said when releasing the research on Monday.
Too much political debate around superannuation was focused on annual tax concessions and ignored dramatic changes to workforce participation, increasing health costs, and patterns of wages.
“Our superannuation system has been the envy of the world but, despite this, superannuation has been the subject of political whims for too long,” Paul Carter, National Australia Bank’s head of superannuation platforms, said in an interview with The Australian.
“Too often the debate has focused on the year-to-year changes in tax concessions in our retirement system despite the fact that it is yet to fully mature.”
“Superannuation has been the subject of political whims for too long,” Mr Carter said.
“The end result has been constant tinkering, or significant unanticipated change, which has left Australians feeling uncertain about their retirement.”
Mr Carter’s comments come after PwC’s head of superannuation, David Coogan, told The Australian that many of the firm’s clients were cutting back on their extra super contributions to super as they had been “spooked” by the budget changes.
The budget announcement involvement an immediate cap of $500,000 on post-tax contributions to superannuation, with contributions calculated from July 1, 2007.
They also involve a proposed cap of $1.6 million on the amount of money which can be put into a tax free super fund as well as a proposed cut in the concessional superannuation limits from $30,000 a year and $35,000 a year for people over 50 to $25,000 a year.
Mr Coogan said the big impact was being felt in the post-tax contributions to super with people cutting back on their extra contributions even if they were below the $500,000 cap.
“We are finding that people have put off their voluntary contributions into super,” he said.
“They have either slowed down or stopped adding extra contributions to super over the last few months.”
As the government faces an internal backlash over policies to rein in superannuation tax breaks, MLC said there was a need to limit tax concessions for the most wealthy retirees.
However, it also argued the system should have the overarching aim of encouraging people to save enough for an “adequate” income in retirement, rather than to supplement or substitute the pension, as the government is proposing.
The wealth manager’s definition of “adequate” is about 70 per cent of pre-retirement income, capped at roughly $95,000 a year for the sake of equity.