Super critical to Australia’s future
Action needs to be taken to ensure Australia's superannuation system can reduce reliance on the Age Pension in years to come, financial services organisations believe.
Responding to the 2015 Intergeneration Report, Financial Services Council chief executive, Sally Loane, said the findings emphasised the need for Government action to ensure the sustainability of both the Age Pension and the superannuation systems.
With the report forecasting that by 2055 there will be 2.7 working Australians for every Australian over 65 compared with 4.5 at present, Loane warned that the current rates of Age Pension uptake were not sustainable.
"The Government needs to consider whether the correct people are receiving the Age Pension based on their personal need," she said.
"The income and assets test for the Age Pension should be reviewed to ensure it is not too generous for those people who can fund their own retirement and not miserly for those who cannot.
"Superannuation must be allowed to reduce ageing costs. This will be achieved through properly calibrating the super and Age Pension systems."
Self-Manage Superannuation Fund (SMSF) Association chief executive, Andrea Slattery, echoed the FSC's call for the Government to "encourage lesser dependence on the Age Pension", by persuading people to forego income today to have financial security in retirement.
"The IGR projects only a small reduction in reliance on the pension," Slattery said.
"In light of this projection, surely it underlines the Association's argument that superannuation has to encourage and allow people to build adequate superannuation balances and this requires the right incentives for long-term savings."
Meanwhile Actuaries Institute president, Estelle Pearson, described the report as a "policy wake-up call" for the Government.
"The report demonstrates conclusively that policy action is required if the Government and the community want to ensure that older Australians enjoy a comfortable retirement without unfairly burdening younger generations," she said.
"It is clear that without policy action, the ageing of our population means future workers will pay a higher proportion of taxes to support the elderly than occurs today."
To ensure the sustainability of the system, Pearson said the Government needed to "progressively increase the superannuation guarantee level to 12 per cent", while Industry Super Australia also backed calls to unlock the "potential of the super system".
Recommended for you
Underestimating the cost of insurance by almost $75,000 in a Statement of Advice is among multiple reasons that a relevant provider has faced action from the FSCP.
Financial Services Council chief executive, Blake Briggs, is urging Minister for Financial Services, Stephen Jones, to take advantage of the QAR opportunity to reduce regulatory duplication and ensure advice is affordable.
Former chair of the House of Representatives’ Standing Economics Committee, Tim Wilson, is planning a return to politics after losing his seat in the 2022 federal election.
Morningstar is going to offer research ratings of funds in the $3.5 trillion superannuation sector for the first time in response to demand from financial advisers.
