Two superannuation industry bodies have hit out against the Productivity Commission’s (PC) suggestion to lift the preservation age to 65, arguing it does not take into account those who face involuntary retirement.
Commenting on the PC’s report into retirement policy, the Australian Institute of Superannuation Trustees (AIST) said up to 40 per cent of older Australians are forced into retirement due to various reasons like age discrimination and poor health.
The industry body called for more to be done to tackle involuntary retirement among older Australians before super preservation age levels were changed.
“The Productivity Commission itself acknowledged that changing the preservation age won’t help those who currently retire involuntarily and will lead to only a marginal two per cent increase in overall workforce participation,” Garcia said.
“We question the benefit of such a policy change that will only make it harder for a significant number of vulnerable older Australians to access their own super savings.”
Industry Super Australia chief executive, David Whiteley, said increasing the compulsory super guarantee to 12 per cent, and making the tax setting fairer would be more effective in boosting retirement savings than raising the preservation age.
“Modelling by ISA estimates that for a female retiring in 2055, increasing the super guarantee to 12 per cent and retaining the $500 low income earners contribution would increase her super balance by 20 per cent, and for a male by 12 per cent,” Whiteley said.
The Financial Services Council, on the other hand, has come out in support of lifting the super preservation age to 65, but said it has to consider the needs of those who are unable to work to retirement.
FSC chief executive, Sally Loane, said Australians must consider working until 65 years, saying this would save the government $7 billion a year once executed.
“Policies which encourage older workforce participation will be needed — the Government’s ‘Restart’ program is a good start,” Loane said.
The Association of Super Funds of Australia, chief executive, Pauline Vamos said the preservation age should be linked to the Age Pension age, and set five years lower than the Age Pension age, but should be capped at 62 years of age to consider those who are forced to retire early.
“If this were done then the preservation age would increase automatically, and in synchronisation with the Age Pension eligibility age,” she said.
Vamos also called for the Tax White Paper to consider those who have broken work patterns, and said the system should allow them to catch up.
