Lack of policy coordination generating ‘perverse’ outcome

Australian retirees are being exposed to “perverse outcomes” because of the Government’s failure to coordinate superannuation policy with social security policy, according to the SMSF Association.

The SMSF Association has used its pre-Budget submission to express its “major concerns” about the lack of policy integration stating that a siloed approach to policy making had “created policy settings in superannuation and social security that conflict and do not support each other to provide retirement income for Australians”.

“They also result in perverse outcomes for many Australians in retirement, which we believe may be an unintended consequence from this siloed approach to,” the submission said. “In many cases this can create significant disincentives for saving for retirement, which we believe would not be the Government’s intention.”

It said a more coordinated retirement income policy approach was required to avoid these issues from occurring going forward and to address current weaknesses.

The SMSF Association submission said it believed that the poor policy coordination between superannuation and social security was being evidenced by:

• Poor integration between the age pension and superannuation.

• Policies being implemented without consideration given to the Government’s proposed objective of superannuation.

• A lack of clarity concerning costs and benefits of superannuation offsetting age pension costs.

It said that on a larger scale, this lack of policy coordination was evidenced by the absence of a clear plan as to how Australia would address its aging population which required a coordinated approach to policy covering retirement income, health, aged care, housing and many other policy areas.