Keating's 5-point plan for super
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Christine St Anne is Morningstar's online editor.
As treasurer and prime minister, Paul Keating led a number of significant social and economic reforms. Deregulating Australia's financial system, floating the Australian dollar, privatising the Commonwealth Bank of Australia, cutting tariffs, and dividend imputation were all among his key reforms.
Chief among these was a national system giving all workers access to universal superannuation.
Now in its 50th year, the Association of Superannuation Funds of Australia (ASFA) invited Keating to give an address at its national conference. His topic was: "The future of super: Does retirement income public policy and the design of the super system need to move in a new direction?"
In his speech, Keating outlined a detailed vision of a superannuation system that will indeed meet the retirement needs of future generations.
1. Need for a rethink on longevity and adequacy
Keating commended the support by both sides of politics for lifting the superannuation guarantee (SG) to 12 per cent, saying it has now become a "desirable national objective".
However, Keating says the 12 per cent SG will simply not be enough to meet the needs of retirees, as people are simply living longer.
As people are living longer, Keating has called for a rethink on the retirement phase. He says there are now two age groups in retirement: the 60 to 80 year-olds and the 80 to 100 year-olds.
For the 60 to 80 age group, retirement is about living and having a lifestyle. For those over 80, retirement becomes more about maintenance, managing disabilities and aged care.
"The policy promise from superannuation is about having a good retirement. But adequacy with the challenges of longevity means this promise is not secured," he says.
Many people aged over 80 will have to eventually rely on the aged pension.
"Therefore, the standard of living drops for many people in the last decade of their lives," Keating says.
Keating advocates an extra 3 per cent on top of the 12 per cent SG to be portioned into funding healthcare, and more importantly, aged care.