AUSTRALIA - Speculation is mounting that Treasurer Wayne Swan will devote part of the 2008-09 budget surplus to improving superannuation savings.
This speculation comes at a time when industry participants are calling for increases to the current employer mandated 9% superannuation contribution, according to a survey by Russell Investment Group.
Employee contributions are the favoured route, with 62% of respondents - Australian employers and superannuation funds - saying that the cost should be shared between employers and employees.
The 2008-09 Budget is predicted to net a surplus of 1.5% of GDP. Any superannuation proposals should be developed as the starting point of a longer term debate over pension adequacy, including future legislation mandating member contributions, said David Knox, a principal at Mercer Investment Consulting.
"We have a new government, we now have a minister for superannuation," Knox said.
"As part of that discussion, let's have a debate about member contributions, about soft compulsion and those sorts of issues relating to the overall framework, rather than throw it into this year's Budget."
If the government chooses to make a one-off payment into a taxpayer's superannuation fund, the impact under normal actuarial assumptions could make a noticeable difference, according to Steve Schubert, director of Russell Superannuation.
"Let's say the government made a one off contribution of A$1,000 (US$946)," Schubert explained. "Assuming a 4% pa real rate of return, this contribution to a 25-year-old's superannuation account would yield A$4,800 by retirement age of 60. Over the next 20 years in retirement, that nets an extra A$346 per year in income."
The Pensions and Lifetime Savings Association (PLSA) is in the process of convening an industry-wide group to take forward the work of the Institutional Disclosure Working Group (IDWG).
The Transfers and Re-registration Industry Group (TRIG) has given its support to an initiative which aims to complete occupational pension transfers within three weeks.
Scottish Widows has completed a bulk annuity deal for the Hitachi UK Limited Pension Scheme.