Paul Keating on 7.30 Report: Super rise to 12 per cent will barely cut it

Architect of the superannuation scheme, former PM Paul Keating says even a rise to 12 per cent “will barely cut it”.

Former Prime Minister Paul Keating gestures as he speaks during a roundtable discussion during the Banking & Wealth Summit 2018 in Sydney, Thursday, April 5, 2018. (AAP Image/David Moir) NO ARCHIVING

Architect of the superannuation scheme, former prime minister Paul Keating said even a rise to 12 per cent for the superannuation guarantee “will barely cut it”, and elderly Australians are being left financially destitute.

“When I designed super … people retired at about 65 and died at about 85 but your children, and my children will probably now live to 100 or 105, the pool of money runs out at about 85,” Mr Keating told Leigh Sales on the 7.30 Report.

“Once you get into your nineties and noughties, there is nothing to support you but your basic pension, what I believe we should have is a longevity levy, not superannuation, but a national insurance scheme, a modest levy, like the Medicare levy.”

Mr Keating said his suggested change would look after people over the age of 85, and support them throughout the rest of their life.

People who die earlier would subsidise those who live longer, the former prime minister explained.

“It’s just like fire insurance, everyone pays for insurance in the street, 30 houses, 2 houses burn down over 20 years, the other 28 houses pay for it.”

Mr Keating said the aged pension was never enough to allow for flexibility in retirement.

“The aged pension is a great social block, but it is an anti-destitution payment and super is meant to build on that.”

“In a wealthy society like Australia where the economic system can produce enough wealth to give people flexibility in retirement.” Mr Keating continued, saying elderly Australians should be able to have enough money to cope with unexpected costs.

“If your son or daughter are getting married in Europe and you want to go to the wedding … if you have your nest egg and your super you can have some of the flexibility in retirement that a country like Australia should afford you.”