The Alliance for a Fairer Retirement System (the Alliance) has welcomed the federal government’s Review into the Retirement Savings System and has put forward five questions the process should answer.
The first question the Alliance would like answered as part of the review is how can the retirement income system include incentives to encourage Australians to save enough for an independent retirement without introducing savings disincentives along the way.
“At present, only 30 per cent of the population over 65 is independent of government support. The remaining 70 per cent is comprised of 42 per cent on the full age pension and 28 per cent on a part age pension,” Alliance spokesperson John Maroney noted.
“As the superannuation system reaches maturity and balances at retirement increase, reliance on the age pension will reduce. Over the same time period, the number of people and the proportion of the population, in retirement will increase,” he added.
“The Alliance calls on the Review to consider the adequacy of super to support retirees into the future.”
Another question the Alliance has asked of the government in its review is what the defined objectives of superannuation and the age pension are and how can these two elements complement each other to ensure sustainability and intergenerational equity in the retirement system.
To this end the Alliance pointed out constant change to the system erodes confidence in it and can result in unintended consequences that threaten the retirement income system’s viability.
As such the group has called for any future changes to the system be made only after a full regulatory impact statement has been prepared that will consider the effects the change will have on the other components of the system and assess appropriate grandfathering provisions that will allow retirees to change their strategies over a reasonable timeframe.
Other questions the Alliance would like to addressed during the review are:
- What is an adequate level of retirement income commensurate with their pre-retirement standard of living that older Australians should seek to attain?
- How can retirement income policy settings ensure the maximum degree of certainty for those planning for retirement over decades?
- Where are there gaps or issues that indicate a lack of fairness in terms of either horizontal (between people with similar circumstances) or vertical (between different generations) equity in the existing three-pillar retirement system?
The Alliance also took the opportunity to congratulate its former spokesperson Deborah Ralston on her appointment as a review panellist.
The federal government formally announced its intention to hold a review of the current retirement savings system and revealed the terms of reference to be used late last week.
The Alliance is made up of 11 industry bodies being the Association of Financial Advisers, SMSF Association, Australian Investors Association, Self-managed Independent Superannuation Funds Association, Gold Coast Retirees Inc, Association of Independent Retirees, Listed Investments Companies and Trusts Association, Australian Shareholders Association, National Seniors Australia, Stockbrokers and Financial Advisers Association, and WA Self Funded Retirees.
Written by Darin Tyson-Chan