ASFA chief executive Pauline Vamos said that while ASFA supports the FSI’s proposal to “provide income in retirement to substitute or supplement the age pension”, if “narrowly interpreted, it could mean that superannuation only provides assistance up to the level of the age pension”.
“This would not be an acceptable outcome for the community and would fall well short of delivering on the social goals of the system,” said Ms Vamos.
ASFA has instead proposed that the definition should be: “Ensure that all working Australians save for their retirement throughout their working life to achieve an adequate level of income throughout retirement."
The alternative definition, Ms Vamos said, proposes that the system delivers adequate retirement outcomes with “commensurate economic and social wellbeing, free from undue hardship”.
In defining adequacy, ASFA disputed the idea proposed by the Organisation for Economic Co-operation and Development that a replacement income rate of 65 per cent of pre-retirement income is an adequate level of retirement income.
ASFA said that this should not be the sole measure, because the purpose of the system “should not be to support that level of income replacement for very high earners”.
ASFA said the retirement standard 'comfortable' income level could be an alternative goal.
"Achieving a comfortable retirement is the hope and aspiration of the bulk of Australians, and the achievement of this is fundamental to Australia's economic and social wellbeing," said Ms Vamos.