Paul Keating calls for longevity tax to supplement superannuation for people aged 80 to 100

Updated

Former prime minister Paul Keating is calling for an extra tax levy to supplement the superannuation income of people over 80.

Mr Keating has told Lateline the existing compulsory superannuation system should have the capacity to cover people aged 60 to 80, but more is needed as Australians continue to live longer.

"We can't try and pretend that like a piece of Indian rubber, we can stretch the (super) accumulation from 65 to 95," he said.

"There's not enough of it now and it can't go for 30 years."

Mr Keating says a so-called longevity levy of 2 to 3 per cent could be pooled to help pay the pension, accommodation and healthcare costs of people aged 80 to 100.

"It's a classic insurance thing. It's like the houses in the street: you pay your insurance, but only one house burns down.

"What happens? One person dies earlier, but their work and savings subsidises other people who last into their late 90s.

"So it's a classic model for an insurance scheme, but it's got to be done in the 80-to-100 cohort while we continue to build the (super) accumulations between 60 and 80."

The former Labor leader says the issue requires a different basis of thinking to anything that has been done by the former Labor government or the Coalition.

He says the first step would be to ensure the rate of superannuation rises from 9 per cent to 12 per cent.

"Kevin Rudd and Wayne Swan did kick super from 9 to 12 per cent, and I'm hoping that Joe Hockey and Tony Abbott will after their two-year interregnum move on to 12."

Former treasurer's criticism for Treasury

Mr Keating also had some unflattering things to say about the department which he headed when treasurer under Bob Hawke.

He says Treasury never liked the idea of compulsory superannuation.

"The Treasury's a great department of state, but it has not a scintilla of imagination," Mr Keating said.

"If you asked them to have established our existing scheme, they opposed it all along the way.

"Yet they believe people will just fork out for the pension and live on a lower, less valuable age pension as they go to their 80s and their 90s with geriatric care, geriatric assistance, hospitalisation and all the rest.

"It's not going to happen. We're going to have to provide for it now."

Topics: superannuation, aged-care, older-people, welfare, federal-government, government-and-politics, tax, budget, australia

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