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Industry Super slams Grattan Institute over ‘contradictory’ super claims

Industry Super Australia (ISA) has slammed the Grattan Institute over what it says are attempts to undermine the super guarantee.

ISA says that despite the Grattan Institute releasing research a few weeks ago that claimed increasing the super guarantee to 12 per cent would not ease the burden on the Age Pension, it’s now are claiming that an increase will leave workers poorer, because it will reduce the amount they are entitled to through the pension.

“Both can’t be true,” says the ISA statement. “Not only does one completely contradict the other and make a mockery of the claims, the modelling Grattan relies on to peddle these myths is deeply flawed.

“Under their modelling, the effect of the superannuation guarantee on wages, pension indexation and taxation is incredibly overstated, and assumes women, low-income and self-employed workers don’t exist.

“They double count salary sacrifice contributions, and overestimate voluntary contributions and the amount of Age Pension paid.

“In short, they are wrong. Industry Super Australia analysis conducted by former senior Treasury official Phil Gallagher found the Grattan Institute’s modelling:

  • Overestimates the effect of a super guarantee increase on wages, pension indexation and taxation
    • The Grattan analysis ignores the fact that only 57 per cent of people with employer contributions are likely to receive an increase in superannuation. A significant number of workers either receive contributions higher than 11 per cent, or lower than 7 per cent, meaning an increase from 9.5 per cent to 12 per cent will not affect them.
    • Of 12 million employed people, only 6.1 million are likely to get a rise in super contributions. Exclusions of self-employed, public servants, academics, politicians, people under 18, employees earning under $450 per month and people over 74 impact the population.  It also assumes the Government has taken action on unpaid super when it hasn’t.
  • Overstates the amount of age pension paid and average life expectancy
    • The Grattan analysis only includes the single rate pension which is 25 per cent more than a married rate pension for one partner.  Since the majority of pensioners are married, this produces a massive uplift in pension paid and a false conclusion that retirement incomes are more than adequate.
    • Grattan assumes that everyone lives until they are 92, getting far more pension than occurs if there is a distribution of life expectancy.
  • Overestimates superannuation contributions
    • The Grattan analysis assumes continuous careers from age 30 to age 67, ignoring the fact that people take time out of the workforce for a range of reasons, most notably for parental leave.
    • There are no women in the model.  No-one becomes self-employed in the model.
    • Grattan double count salary sacrifice contributions and do not represent underpayment of super which affects 30 per cent of employees.
    • Industry Super Australia Acting Chief Executive Matthew Linden said the Grattan Institute had been caught out contradicting itself, making its argument obsolete.

 

“One week they’re claiming an increase in super won’t reduce the age pension, the next they claim people will be worse off because they will miss out on the age pension if they retire with more money,” said Mr Gallagher.

“Both can’t be true. This proves their analysis simply doesn’t stack up. Despite this, they continue to use deeply flawed modelling to peddle incorrect and misleading claims about the superannuation guarantee.

“Any attempt to wind back the proposed super increase or freeze it altogether would not only affect Australians’ quality of life at retirement, it would increase the burden of the age pension on the budget.”

What do you think of these claims? Is the Grattan Institute’s modelling flawed?

8 comments

My understanding of the Super Guarantee won't have the Full Possible Benefit until a Child Born in 1975 has reached Retirement Age (Australia).

Which is some 23years away.

Some may have More Generous Employer and Government Type Super Benefits, this is not available for All.

So how OAP/Super Groups have traveled so far to now isn't how All had the Chance of The Full Benefit of Super Guarantee.    

This government has gone a long way to solving one of the biggest problems the Superannuation Industry has been unable to fix. I'm talking about duplicity of membership. The additional fees being paid by members with several accounts would be almost $3B. An absolute disgrace that Super Funds should be raking in this sort of money through their own laziness.  

Of course the other real issue is who sits on the boards and how much influence they have over fund managers? And how much influence Fund Managers in turn have over businesses, particularly listed businesses? 

Adrianus,

The laziness stems from the people with multiple super accounts. They need to consolidate the accounts.

By the way how would a superannuation company know who has multiple accounts?

Industry Super Australia is a biased, thug union controlled mouthpiece for union controlled super funds and the arms length (partly hidden) entities such as Industry Funds Services who do the things the super funds cannot - and even employ Chloe Shorten as a director - paid for by members funds.

Any comment from them is entirely self serving and should be judged as such.

For once, I would take the Grattan Institute analysis as accurate.

Cant agree with you not a bludger they seem to run a fair show to me as once I was once with a retail fund which  I thought was great as it made out but the overall almost lost me all my Super.Thats the way bI see it .

Same as normal the super, if you dont like what your in get out of it but stop trying to tell people what you think there super is and where they should be when you dont know what your talking about

Same as normal the super, if you dont like what your in get out of it but stop trying to tell people what you think there super is and where they should be when you dont know what your talking about

The problem with all modelling, no matter what the issue, is that the results can be skewed to prove any sought after result by the assumptions on which the modelling is based.Modelling is always based on SWAGs (ie Scientific Wild Arse Guesses). I am sure, if I was inclined, I could produce modelling that would show that Gold Coast Suns will win the 2019 AFL premioership.

If both statements cannot be true then does that statement not provide a higher probability that one statement may be true?

8 comments