Actuaries Institute urge Government to review entire superannuation system
The Actuaries Institute is calling on the Government to develop comprehensive guidelines to give Australians a comfortable lifestyle in retirement that is both ‘equitable and flexible', in line with the Association of Superannuation Funds of Australia (ASFA) comfortable retirement standard.
In a submission to the Treasury, the Actuaries Institute said it wants the Government to provide objectives for the whole retirement system, including the Age Pension and Superannuation Guarantee, with objectives for each component.
It comes following the Financial System Inquiry's recommendation last year, for the superannuation system to have an objective of providing income in retirement.
President of the Institute, Linday Smartt, said Australians will not have sufficient superannuation to live comfortably in retirement and will still require Age Pension payments at some period from age 67 onwards.
"One of the objectives of superannuation should therefore be; to supplement the Age Pension in order to provide a combined level of income that allows Australians to live a dignified retirement"
He said, when determining what an adequate retirement income is, instead of a percentage of pre-retirement income, which favours high income earners, it's better to target a dollar amount.
Smartt said, it should be determined after taking the after-tax income of the majority of working Australians and retirement living standards into account. For example, what the Association of Superannuation Funds of Australia (ASFA) call "comfortable".
"If we can get a least 50 per cent of Australians up to the ASFA comfortable level using just their superannuation savings and the Age Pension, then we will certainly be a long way towards achieving a reasonable standard of living in retirement for most Australians," he said
"There should be a target in relation to portion of Australian pensioners living below the poverty line (currently 36 per cent according to the Organisation for economic co-operation and development (OECD))."
The Age Pension might need to be increased and or specific groups might need to be helped, for example those getting rental assistance and that, "Australia should lead the world in poverty alleviation", Smartt said.
"Ongoing tinkering" has been a feature of the superannuation system for decades, and if Australia has an "equitable and sustainable retirement income system that efficient delivers on its objectives we will not need ongoing tinkering", said Smartt.
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