Super will still depend on tax
"As we debate the merits or otherwise of the Government’s proposed superannuation fund, people need to know what exactly it will do – and what it won’t do," National Finance spokesperson Bill English said today
"The Government says the fund guarantees certainty and security. The general belief appears to be that the government investment fund will look after most of the future costs of universal superannuation.
"That is not correct.
"While the fund will start building from next financial year, it will not start paying out until around 2025.
"For someone aged 65 today, the fund will not make any contributions to their retirement income until they turn 90.
"People who are 50 today, who retire at 65, will see their taxes go towards a fund that will start contributing to their pensions when they turn 75.
"The second issue is that the fund starts to pay out gradually. In its first year of paying out, in 2025, it will only contribute around 1% of the costs of superannuation. That means 99% will still be funded on a pay-as-you-go basis, by taxpayers at the time.
"At its peak around 2040, the fund will contribute around 14% of the current costs of superannuation. About 86% will still be funded from general taxation.
"For someone aged 40 today, the most this fund will contribute towards their retirement income will be 14% in any one year.
"So it’s questionable how much certainty the fund can provide. At least 86% of the cost of super will have to be funded from taxpayers’ money at the time, and governments in 30 or 40 years will still be obliged to consider what is a fair deal for superannuitants and the rest of the community," Mr English said.