The report, which was commissioned by Industry Super Australia, assessed various policy scenarios using a comprehensive group-based fiscal model that considered all relevant variables including the impact of the super guarantee on the age pension, personal wealth, income and company taxes.

The analysis considered the full fiscal impact of effectively abandoning the super guarantee and all associated tax benefits and reverting to a more generous, but means-tested, publicly funded pension that would deliver broadly equivalent retirement benefits.

In the scenario, the maximum rate of age pension was increased by 50 per cent to deliver the same outcome as the current age pension and the SG for a median wage earner.

In effect, Rice Warner said this replicates the path other countries have taken when they don’t have compulsory privately funded retirement schemes.

The report stated that replacing the SG with a higher age pension would result in a significant and immediate increase in age pension outlays, that accelerates over time.

“By 2058, expenditure on the age pension [would be] doubled in real terms, demonstrating the importance of the SG in preventing a high fiscal cost as the population ages into the future,” the report said.

The report found that revoking the legislated 12 per cent SG rate and freezing it at 9.5 per cent would have a modest budget benefit in the short-term through higher taxation.

However, it found that the short-term budget benefit will be offset over time by lower superannuation earnings and increased age pension expenditure, with a net negative budget impact evident after 25 years.

Industry Super Australia deputy chief executive Matt Linden said the findings of the report lay bare claims that super costs the budget more than it saves and strengthens the case for proceeding with the legislated rise in SG.

“It also shows compulsory super combined with a supplementary means-tested pension is the most efficient pathway for governments to meet community expectations about retirement incomes,” Mr Linden said.

“Superannuation saves Australia from the budgetary, economic and social unrest evident in parts of Europe who have long struggled to grapple with unsustainable publicly funded pensions.”