The financial Ponzi system needs govt help - 'saved' the banks now 'save' super - a call to action!
Super threat for baby boomers by Nick Gardner
A LOOMING surge in baby boomer retirees may force superannuation funds to freeze assets and ban withdrawals unless minimum contributions rise from nine to 15 per cent of wages and salaries.
One of Australia's leading demographic economists has warned a critical point will be reached in 15 years when there will be more people withdrawing cash from super funds than there are workers contributing to them.
Brian Haratsis, chief executive of Macroplan Australia, says unless more money is pumped into the system by current workers, many funds may not have enough liquid assets to meet redemptions, forcing them to shut up shop.
"It's the biggest problem that nobody is talking about," Mr Haratsis said.
"The number of people retiring is going to double in the next couple of years and unless we take action ahead of time, the only solution will be government intervention and a massive restructure of the superannuation industry."
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While Mr Haratsis says the government will never actually allow the funds to freeze, it must act soon by increasing the super guarantee to 12 per cent as quickly as possible - and then to 15 per cent for a period in order to make sure that funds have enough money to meet the impending "hump" in retiree numbers caused by the retiring baby boomers.
The Government has committed to raising the contribution level to 12 per cent at some time before 2020, a move Mr Haratsis says will be too little, too late.
"If the stock market goes sideways for a few years ... then the contributions may have to go even higher. It all depends on fund performance," he said.
He added that one thing was certain - the current level of contributions was not enough to ensure the funds were adequately capitalised.
