Unless the focus of retirement income policy is shifted to superannuation rather than the Age Pension, Australia is in danger of having as many as two-thirds reliant on the Age Pension.
That is the bottom line of a submission to the Senate Economics Committee review of the Government’s legislation around the objective of superannuation, with the SMSF Owners’ Alliance suggesting the Government has aimed too low.
It said the stated objective for superannuation in the Bill — to “substitute and supplement” the Age Pension was “inadequate and lacks ambition”.
“It positions superannuation in merely a supporting role for the Age Pension. It is a missed opportunity to position superannuation as the main plank of a comprehensive retirement incomes policy that encourages Australians to take responsibility for their own financial security in retirement rather than rely on the taxpayer funded Age Pension,” the submission said.
It said that as Australians live longer and spend longer in retirement “it is imperative to boost their savings via superannuation so they do not become a burden on the next generation”.
“Unless the focus of retirement income policy is shifted to superannuation rather than the Age Pension, the gloomy prediction of the 2015 Intergenerational Report — that by 2055 two-thirds of Australians will still be reliant on the age pension — is likely to be realised,” the submission said.
“The role of the Age Pension should be a social safety net for Australians who are unable to save enough to fund their own retirement. Australians who have the capacity and potential to be self-sufficient should be encouraged, enabled and required to do so via mandatory and voluntary contributions that are taxed concessionally,” it said.
The submission said that concessional taxation recognised that superannuation was a forced savings measure that deferred consumption at the expense of other spending priorities, like buying a house, and also that savings were locked away until retirement.
“Defining superannuation as merely to ‘substitute or supplement’ the Age Pension sets no benchmark for the performance of superannuation,” it said.
“It is meaningless to set an objective for superannuation that does not include even a very general performance goal.”
