SG increase key theme of retirement review submissions

An increase of the superannuation guarantee (SG) has emerged as one of the key messages arising from the submissions to the Government’s current review of retirement incomes.

Key messages from the submissions included proposals that the retirement income system allow individuals to save in retirement, as well as encourage individuals to work into retirement. Another recommendation was to facilitate transitions between work, self-funded retirement and the age pension.

The Australia’s Future Tax System Review panel released two consultation papers yesterday addressing the complexities of the retirement income.

The papers canvassed responses by members of the community to consultation questions relating to the SG, existing health and aged care services, including the adequacy of the age pension, and superannuation income tax concessions, and the role of government in the retirement income sphere and in relation to self-employed individuals partially or fully excluded from the SG system.

Responses indicated support for the existing three-tired retirement income system (age pension, compulsory savings and voluntary savings), while recommending various changes, including an increase to the current SG of 9 per cent and consideration of a better method of dealing with the risk of people outliving their savings and assets.

The Association of Superannuation Funds Australia (ASFA) expressed support for the Rudd Government’s initiatives in reviewing the retirement income system, with ASFA’s chief executive, Pauline Vamos, saying policy changes are needed.

“The consultation paper identifies the many strengths of our system but also the weaknesses.”

Vamos added ASFA was “heartened to see, for the first time, alternative estimates of the costs of tax expenditures on superannuation that have been prepared on a realistic basis”.

The documents also indicated a range of views relating to whether the retirement income system should be separate to that of working age.