12% Super Guarantee rate will “barely cut it”, says Paul Keating

Paul Keating says the 9.5% Superannuation Guarantee rate “won’t cut it” and the legislated 12% rate will “barely cut it”.

Speaking to 7.30, Keating said that when he introduced superannuation people retired “about” 65 and died around 85. But that now people were living into their late 80s and children today could expect to live to 100 or 105.

“The superannuation pool isn’t large enough to maintain the sort of standard of living we wish for them,” he said.

Keating noted that a US treasury bond now pays around 3.2%, and said that when the equities boom “finishes” there will be 20 years of low interest rates.

“Try living on 3.2%.”

“The super pool at 12% will run out about [age] 85, or maybe you could stretch it to about 90,” after which there was “nothing to support you but the basic pension”.

For some time Keating has been calling to for a ‘longevity levy’ – a national insurance scheme, similar to the medicare levy – which guarantees income support, age care accommodation and health beyond age 85.

Asked if that was what the Age Pension was for, he said that the pension was an “anti-destitution” measure.

Keating expects the Banking Royal Commission to recommend changes to the structure of retail super funds, saying “the trustee structure in the retail funds is a joke”.

Keating criticises Grattan Institute report

Keating also used the interview to criticise the recent Grattan Institute report – which argued that there was already enough saved in superannuation.

Related: Financial services a “fear factory”, more than enough in super

Keating said that John Daley – CEO of the Grattan Institute – “doesn’t get it, with his miserable view about the two Australias” in which wealthy people have “all sorts of assets” while ordinary people are “condemned” to the Age Pension.

He specifically criticised the recommendations by the Grattan Institute that homes be included in the pension assets test – “eat your house” as Keating put it – and an inquiry into raising the pension age to 70.

Mr Daley took to twitter to respond:

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