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(April-2003) Helping older workers to plan better
The Senate Select Committee on Superannuation is conducting an inquiry into planning for retirement. Under this reference, the committee is seeking to identify the opportunities and mechanisms to assist older people, especially those about five to 10 years away from retirement, to plan for, and make the transition from, work to retirement.
While some people plan to retire at a certain age, this might be determined by such factors as a mandatory retirement age for safety reasons, the preservation age for accessing superannuation benefits, eligibility for the age pension, or the cut-off age under the SG legislation for employers to provide contributions for employees. But not all individuals retire at a fixed age and some may ‘retire’ more than once.
For example, some individuals take redundancies (either voluntary or involuntary) and return to work later. Others might either phase-down their working hours (either voluntarily or involuntarily), semi-retire or choose never to ‘retire’ at all. Others might find that, for financial or other reasons, they have to consider extending their working lives beyond the age at which they expected to retire. Workers engaged in jobs which are physically demanding may need to consider alternatives in later life.
These different approaches have the potential to introduce an element of complexity in planning for retirement. They also have potential implications for the superannuation system, the social security system, the tax system, and the workplace relations system.
With this context in mind, some of the sorts of issues the committee expects to explore are:
* possible means by which the employment of older workers making the progressive transition from work to retirement could be encouraged by employers and the Government, and whether this could or should include benefits such as wage subsidisation, training of older workers or tax incentives.
* the ability of employers to offer increased work flexibility to older workers such as job rotation, phased-down hours or part-time work, working from home, short term contracts, consultancies to former employers or related work areas.
* the current preservation rules to determine whether there is, or should be, scope for individuals to access either the preserved or non-preserved component of their superannuation entitlements to assist with the transition from work to retirement, such as retraining.
* the current superannuation contribution arrangements, including current age limits and work tests, and the scale of the age-based maximum deductible contribution limits, to determine any scope for increased flexibility to better meet the needs of people making the transition from work to retirement.
* ways to improve awareness of the need for retirement planning by both men and women, including the need, especially for older workers, to identify their goals and financial needs in retirement (to meet capital and lifestyle requirements), their time frame for retirement (including that of their spouse if he or she is of a different age), their health and housing needs, and what they might do in retirement.
* ways to improve knowledge and awareness of services provided by government agencies (such as the Financial Information Service provided by Centrelink, information provided by the National Information Centre on Retirement Investments, publications for pre-retirees and retirees produced by the Department of Family and Community Services) and eligibility for social security benefits, concessions and allowances.
* ways to improve knowledge and awareness of the tax implications of redundancy payments and ways to make tax-effective investments and tax advantaged retirement income streams.
* the availability and possible benefits of salary sacrificing to superannuation in the years prior to retirement.
The committee has an open mind on the issues associated with this inquiry and welcomes contributions and suggestions to assist older people to plan for retirement.
The committee is due to report by June 26, 2003. For further details contact the committee secretariat on (02) 6277 3458 or [email protected] or visit the Committee’s website at www.aph.gov.au/senate_super.
— Senator John Watson is the chair of the Senate Select Committee on Superannuation.
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