The 9 per cent of salary that goes to super will have to be increased to at least 12 per cent. That's because 9 per cent is not enough to provide for a comfortable retirement.

Most people in their 40s and 50s will be relying on a part-pension in retirement. The superannuation guarantee has only been at 9 per cent since 2002 and will not benefit older workers that much. It is true there has been an increase in voluntary contributions but it's mainly driven by higher-earning baby boomers who can take advantage of super's tax changes.

Lower earners have been taking advantage of the government's

co-contribution scheme to a much more limited degree. Under this scheme the Government pays $1.50 into a super fund for every $1 of after-tax money invested by a fund member. But the Government's contributions start phasing out once total income reaches $30,342 a year and cuts out altogether at $60,342. The maximum contribution is $1000 a year. That is why it is of most benefit to lower-income earners. But it is the workers in the middle salary band who need more encouragement to save for their retirement.

It will not be employers footing the bill for higher super contributions. One solution is for the Government to introduce "soft compulsion", whereby the extra 3 per cent comes out of workers' pay automatically. But opting out would be a possibility. This system would work because it makes a virtue of inertia and procrastination most people will not opt out.

The financial services industry wants the Government to increase the super guarantee by 3 percentage points. That, however, is wishful thinking.

Compulsory super came about because of a unique set of circumstances. It was in the mid-1980s, when we still had central wage fixing and employers were willing to pay the super contributions instead of stumping up the wage increases, which would have cost them more.

Soft compulsion will be the Government's best option. A possible vehicle for getting there is Treasury Secretary Ken Henry's review of tax and retirement adequacy, a report on which is due this year. The public is likely to be receptive to the idea of soft compulsion. In 2007, the Association of Superannuation Funds of Australia commissioned market researcher ANOP to survey 750 people aged between 25 and 69 on what they thought of soft compulsion. It found nearly nine out of 10 supported soft compulsion as a painless, flexible way to boost super.

The way it could work is that whenever a worker receives a pay rise or changes jobs, he or she would make extra regular contributions to super, unless opting out. It could be stepped up to 3 per cent over time. There may even be a matching or partly matching co-contribution from the Government for those who make the extra contributions and who meet a means test. But first, the super tax breaks that favour the well-off will have to be reduced.

The May budget will confirm just how deeply Australia's finances have gone into deficit as the Government struggles to help Australia avoid the worst of the global recession. Don't be surprised to see the Government using the May budget to wind back the former government's generous super tax concessions to the well-off.

The Howard government's Simplified Superannuation reforms that came into effect on July 1, 2007, were biased heavily in favour of high-income earners. No tax is paid on super withdrawals by those over 60. Also, those over 55 can draw down on their super while, at the same time, salary sacrificing into their accounts (and save on tax). This favours the higher paid.

In its May budget the Government may well put a limit on how much super can be taken tax-free as well as tighten the limits on how much can be salary sacrificed.

Soft compulsion should not come in until the global financial crisis has ended and the economy returns to growth but come it should. Meanwhile, the too-generous tax-breaks to the better-off should be reduced.