Review of the retirement income system
The Treasurer Josh Frydenberg announced (27 September 2019) that Federal Government is commissioning an independent review of the retirement income system.
This review was recommended by the Productivity Commission in its report Superannuation: Assessing Efficiency and Competitiveness and comes 27 years after the establishment of compulsory superannuation.
The review will look at the three pillars of the existing retirement income system, being the:
- Age Pension,
- compulsory superannuation and
- voluntary savings.
The review will cover the current state of the system and how it will perform in the future as Australians live longer and the population ages.
It will 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.
The review will be conducted by an independent three person panel.
Mr Michael Callaghan AM PSM, a former Executive Director of the International Monetary Fund and a former senior Treasury official will chair the review, together with fellow panellists Ms Carolyn Kay, who has more than 30 years' experience in the finance sector across roles both in Australia and overseas, including as a member of the Future Fund Board of Guardians, and Dr Deborah Ralston, who is a Professorial Fellow in Banking and Finance at Monash University, a member of the RBA's Payments System Board and most recently chair of the Alliance for a Fairer Retirement.
A consultation paper will be released in November 2019 and the final report provided to Government by June 2020.
TERMS OF REFERENCE
As recommended by the Productivity Commission in its report Superannuation: Assessing Efficiency and Competitiveness the Government is commissioning an independent Retirement Income Review.
Australia's retirement income system is based on three pillars:
- a means-tested Age Pension
- compulsory superannuation; and
- voluntary savings, including home ownership.
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 will 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.
The Retirement Income Review will 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
- the impact of current policy settings on public finances.
The Australian Institute of Superannuation Trustees has welcomed today’s release of the terms of reference for the Retirement Incomes Review.
AIST CEO Eva Scheerlinck said it was pleasing that the terms of reference for the review were sufficiently broad to enable the Review’s Commissioners to conduct a thorough examination of Australia’s retirement income system.
“The review provides an important opportunity to evaluate how Australia’s retirement income system is tracking and what reforms may be needed to ensure the system is both equitable and sustainable over the long term,” Ms Scheerlinck said. “Australia’s population is ageing, people are living longer and more people are entering retirement with debt or without the security of a home. The system needs to accommodate these challenges.”
Ms Scheerlinck said while already legislated reforms, notably lifting the Super Guarantee to 12 per cent in 2025, would significantly improve the adequacy of retirement incomes for all Australians, the Review was an opportunity to examine how the current policy settings might be changed to deliver better outcomes for vulnerable Australians.
“While Australia’s retirement income system is delivering for most of us, many Australians are still retiring in poverty. We hope that the Review has a sharp focus on how we can improve retirement outcomes for the vulnerable, low income earners and women, who still retire with less than half the super of men,” Ms Scheerlinck said.
28 September 2019.