Former prime minister Paul Keating has called for a government-backed, national insurance scheme to ensure retirees don’t run out of their superannuation savings.
Keating, whose government crafted Australia’s superannuation system, said there is a need for a new scheme to help pay for healthcare, accommodation, and living expenses of retirees who live well into their 80s and 90s, which is becoming more common.
In a super fund forum organised by Visy Industries and Fairfax Media, Keating said that “when the superannuation system was designed 32 years ago, people retired at about 65 or 66 and died at 81,” but with people “now living nine years longer… accumulation at 9.5% of average weekly earnings can’t be stretched out to cover that longevity,” The New Daily reported.
“We have no policy here in Australia for the 80 to 100 cohort,” Keating said.
Martin Fahy, chief executive of superannuation-industry research and advocacy group ASFA, said compulsory super contributions should be raised to 12% of wages, from the current 9.5%, to support Australians during retirement.
Keating was of the opinion, however, that even with the increase in contributions, the current superannuation system would still not be enough to support many retirees.
“I don’t believe that it should be left to superannuation,” Keating told the forum. “I think it should be national insurance scheme. Only the commonwealth can insure across generations.”
Keating said his proposed national insurance scheme would require the federal government to offer a “calibrated” product to help meet the costs of aged care, accommodation, and other expenses.
The former prime minister also said the insurance of those who died early would help support the needs of those who lived longer, The New Daily reported.
