AUSTRALIA - The current level of super guarantee is "not adequate" to deliver a decent level of income in retirement, superannuation minister Nick Sherry says.
He said the 6% increase could potentially cost the government up to $8bn.
His warning follows recommendations from former prime minister Paul Keating who has once again pushed his old campaign to lift compulsory superannuation payments from 9% to 15% and attacked the government's "myopia" for not doing so.
Sherry said that while increasing contributions was desirable, it had to be part of a two part plan which also included an increase in aged pensions.
He pledged that employers would not bear the burden, with increased employee and government contributions among the reform options.
Instead the government would consider reform options such as a 12% super guarantee consisting of 9% employer, 1.5% government and 1.5% worker contribution.
Sherry said: "I would argue there is a need for higher superannuation contributions.
"As a general comment, I would agree that low to middle earners would need a higher level of superannuation contribution above the current level."
He said that in terms of equity, it was unfair that lower-income earners were effectively taxed on a higher rate on their super contributions than their marginal income.
And he stressed the first priority would be to help older Australians who missed out on the super revolution.
He added: "The majority of people who are currently retired and those in their early to mid-50s have very little super savings. So even if you adopted the Keating model tomorrow it doesn't help them in any significant way."
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