The head of the country's largest wealth manager has warned Australians will end up poorer and paying more tax to fund pensions if something isn't done to boost superannuation savings.
AMP chief executive Craig Meller says a lack of savings will leave Australia with a fiscal challenge far more serious than the budget shortfall currently facing the Abbott government.
"We need to take action now to counter what is the most predictable threat to our prosperity over the next 20 to 30 years," he said in a speech on Tuesday.
"And, the simple reality is that saving just 9.5 per cent of your earnings is not enough."
Mr Meller was also critical of the federal government's decision to postpone increases in compulsory superannuation contributions until next decade.
Super contributions were due to increase progressively from their current level of 9.5 per cent to 12 per cent by 2019/2020, but the government has halted super at its current level until at least 2021.
"I think the challenge we've got as a country is that it is always very easy to put off until tomorrow the savings that we need to do," he told reporters after the speech at a CEDA breakfast in Sydney.
"We only have four options: save more, tax more, work longer or be poorer.
"... The longer we put off the hard decisions the more likely it is that we will end up poorer."
Mr Meller said, currently, there were five people working and paying taxes for every retiree, but that number was expected to drop to 2.5 workers for every retiree by 2050.
With six out of 10 retired Australians currently drawing a full pension, that would put a huge burden on taxpayers.
"The harsh reality is that, for many Australians, financial freedom in retirement is a pipe dream, so the draw on the public purse will only increase as we inch closer to the demographic reality," he said.
Mr Meller also rejected calls for greater regulation of the financial advice industry, which has sprung up in the wake of the scandal surrounding Commonwealth Bank's financial planning division.
A Senate report in June blasted the bank over misconduct and fraud and chief executive Ian Narev apologised to customers who lost money after financial advisers forged client signatures to facilitate profit-producing product switches and switched investments without clients' consent.
"Like any profession, we need to prove we can regulate ourselves effectively," Mr Meller said.
"And I believe we can."
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