The Reserve Bank has suggested that the scheduled rise in compulsory superannuation to 12 per cent would be too costly.

Reserve Bank of Australia governor Philip Lowe has essentially backed the Morrison Government’s plan to freeze compulsory superannuation contributions at the current 9.5 per cent rate.

Dr Lowe says higher super would reduce take-home pay, cut spending and may ultimately cost jobs.

Prime Minister Scott Morrison and Treasurer Josh Frydenberg will soon release an retirement income review report which is widely expected to argue against the legislated incremental rise in super from the current 9.5 per cent to 12 per cent between July 2021 and 2025.

“The evidence is that increases of this form do get offset by lower wage growth over time,” Dr Lowe told a parliamentary hearing.

“If this increase goes ahead I would expect wage growth to be even lower than it otherwise would be.

“There will be less current income and if there is less income there may be less spending and if there is less spending there may be less jobs.”

With the coronavirus-induced recession set to depress wage growth to record lows and curtail consumer spending, Liberal backbenchers have reportedly been pushing the Prime Minister and Treasurer to freeze the super guarantee at 9.5 per cent, or perhaps cap it at a simple 10 per cent.

RBA estimates that about 80 per cent of the scheduled increase in the super guarantee would be paid for by lower pay rises.

The central bank says the increase in compulsory savings through super would lead to less voluntary savings.