The average employee retires about $93,000 short of what their lifestyle requires, according to new Investment and Financial Services Association (IFSA) research.

David Deverall, Chair of the group’s Economic, Savings and Tax Board Committee, says the “retirement gap” has improved in recent years but is still significant. Three years ago the gap was nearly $110,000, he said.

“Heavy lifting still needs to be done in the area of improving voluntary savings through incentives such as the lowering of front-end taxes on super contributions,” he said.

Specifically in the group’s sights is the federal superannuation contributions tax, which takes 15% of superannuation contributions from both employers and salary sacrifices.

The IFSA research suggests the tax is a major disincentive to voluntary contributions.

“The bottom line is that if the contributions tax were removed altogether, the retirement savings gap would fall to less than half its current size.”

Mr Deverall says people would react positively to any cut in superannuation costs, citing the participation rates in the Government’s co-contribution scheme as evidence. Some 1.51 million Australians, including a large proportion of young people, have boosted their retirement savings as part of the policy.

“This equates to more than $1 billion added to superannuation accounts and shows that IFSA’s research and advocacy for this measure is based upon sound methodology.”