Paul Keating says young Australians are guaranteed to have $3m in super by retirement – but not everyone agrees

The Guardian

14 hours ago

Paul Keating says the 12% rate of compulsory super contributions from 1 July will 'guarantee' a young Australian joining the workforce today will have more than $3m in savings by the time they retire.
A statement from the former prime minister celebrating the day 'the system finally matures' came with an implicit criticism of Labor's proposal to put an extra 15% tax on earnings from super balances over $3m.
The Australian Financial Review has reported that the former prime minister has privately blasted as 'unconscionable' the Albanese government's decision to not adjust the threshold each year in line with inflation or wages growth.
Keating on Monday wrote that the 12% rate would 'guarantee personal super accumulations in excess of $3m at retirement, reducing the call by the age pension on the Australian budget to 2% of GDP in the 2050s'.
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The former PM's claim goes further than other critics of the policy, which Treasury estimates will affect 80,000 individuals when it comes into effect.
AMP's deputy chief economist, Diana Mousina, said an 'average' 22-year-old earning $98,000 today would breach the $3m limit by the time they retire at age 67.
The Financial Services Council has estimated that 204,000 workers under the age of 30 will have super balances of more than $3m by the time they retire – still less than 5% of that group.
None have said workers were 'guaranteed' to crack $3m in super savings.
And while other tax policy experts have said while indexation is common, they believe it is virtually impossible that the threshold will not be adjusted over the coming years and decades.
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Guardian Australia sought clarification on the $3m claim, but Keating was unavailable before deadline for publication.
Despite Keating's concerns, the policy is expected to pass parliament with the support of the Greens in the senate.
The final scheduled 0.5 percentage-point lift in SG comes 25 years later than Keating hoped when he laid out his vision in a 1991 speech.
'Tomorrow, 34 years after I nominated a 12% wage equivalent as the appropriate level of compulsory contribution into superannuation, the system finally matures,' Monday's statement said.
Keating said the advent of compulsory super had slashed the country's reliance on taxpayer-funded pensions, pointing out that France spends 14% of its GDP on public pensions, Germany 10%, and the United States 7%.
'Australia's pension call on the budget is currently just 2.3% of GDP – a sunken level thanks entirely to universal superannuation.
'Superannuation, like Medicare, is now an Australian community standard, binding the whole population as a national economic family, with each person having a place.'
He told the AFR that savers would have been between $250,000 and $300,000 better off were it not for John Howard's decision in 1996 to freeze the rate at 9% until 2013.