Review of the retirement income system
The Government recently announced an independent review of the retirement income system.
The review, which was recommended by the Productivity Commission in their report Superannuation: Assessing Efficiency and Competitiveness will look at the so called three pillars of the retirement system – the Age Pension, compulsory superannuation (Superannuation Guarantee contributions) and voluntary contributions.
According to the terms of reference, “it is important that the system allows Australians to achieve adequate retirement incomes, is fiscally sustainable and provides appropriate incentives for self-provision in retirement”.
The Review’s principal purpose is to establish a “fact base” of the current retirement income system that will improve understanding of its operation and the outcomes it is delivering for Australians.
Whilst this appears to be an implicit acknowledgement that the Government does not fully understand its own retirement system, it is true that the superannuation, taxation and Centrelink rules have evolved over time somewhat independent of one another, which has no doubt led to unintended effects. For this reason, this aspect of the review is very welcome.
The Retirement Income Review will also identify:
- how the retirement income system supports Australians in retirement;
- the role of each pillar in supporting Australians through retirement;
- distributional impacts across the population and over time; and
- the impact of current policy settings on public finances.
The review panel will Comprise Michael Callaghan, formerly a senior Treasury official and Executive Director of the International Monetary Fund, Ms Carolyn Kay, who has more than 30 years’ experience in the finance sector in Australia and overseas, including as a member of the Government’s Future Fund, and Dr Deborah Ralston, who amongst other significant experience, was most recently was the Chair of the Self-Managed Superannuation Funds Association, the peak body representing SMSF professionals in Australia, as well as being the Chair of the Alliance for a Fairer Retirement System. Dr Ralston’s background in representing the interests of, and advocating for, self-funded retirees may give such retirees some comfort regarding the outcomes of this review.
McConachie Stedman Financial Planning is an Authorised Representative of Wealth Management Matters Pty Ltd | ABN 34 612 767 807 | AFSL 491619