Retirement Income Review

The government was expected to receive the Retirement Income Review (RIR) report on 24 July 2020, the first such review of the system in almost 30 years, said Industry Super Australia.


But unusually for a review of this nature a draft was not circulated for stakeholder comment and it has relied on modelling using data not available to the public or external experts.


In the interests of transparency, it is critical this report is immediately released to the public so its findings can be tested and verified.


The report has an opportunity to build on the successful super system with sensible evidence-based reform that helps provide members with a dignified retirement, addresses entrenched inequalities and tackles under performance while strengthening the default system.


If used as a stalking horse to erode the policies that underpin the system - compulsion, preservation, universality and a strong default system – workers’ retirement savings and the economy will suffer.


The only way to deliver a dignified retirement is to stick to the legislated increase to the super rate to 12 per cent. The increases are more important than ever after balances were hit through the government’s early release of super scheme and the Coronavirus downturn.


Cut the rate and Industry Super Australia analysis shows more than 8 million Australians could be worse off.


For an average 30-year-old couple working full time, cutting the super guarantee increase would deprive them of up to $200,000 in super by the time they retire. During retirement they would lose up to 20 per cent of their income or between $7,000 to $10,000 a year.


Breaking the government’s repeated promises to stick to the legislated increase will not only force workers to either retire with less or work longer - it will undermine super funds’ investment plans to help Australian businesses and build new job creating infrastructure and property projects.


In the last six months the landscape has dramatically shifted but the need for to go to 12 per cent has become greater.


More than 2.5 million Australians have accessed the government’s early release of super scheme and at least 560,000 Australian have emptied their super accounts forcing them to start saving for retirement again.


In addition to the need for a 12 per cent super rate ISA also recommends:

  • Abolishing the $450 monthly threshold on super – this will be critical during and after the downturn as more Australians will likely end up in casual work, have hours reduced or will work multiple jobs.
  • Better protect members' interests by removing under-performing funds from the system, and by APRA applying robust performance benchmarks to all MySuper and Choice products
  • Expand workplace default coverage and strengthen the default system through merit-based selection
  • Lower the Age Pension taper rate to $2 to remove a disincentive to save for middle-income Australians
  • Examine tax concessions to ensure they are being targeted at those that need them the most
  • Pay super on Commonwealth paid parental leave
  • Increase the Low-Income Superannuation Tax Offset (LISTO)
  • No change beyond the legislated age pension age
  • Make super payable on pay day.


The RIR panel must reject dangerous proposals that allow low-income earners to opt-out of super which would only leave them paying more tax now to then have nothing saved for their future.


As too should attempts to raid super to pay for house deposits or mortgages – which would only erode retirement savings and increase house prices – pushing the dream of home ownership further away.


Australia’s super system is among the best in the world, with sensible evidence-based reform we can further unlock its potential to deliver even more for Australian workers.



Comments attributable to Industry Super Australia Chief Executive Bernie Dean:

"The community knows that government faces a tough task, but we can't have this review remaining hidden or used as part of a secret plan for super to create a system where there are those that can have a dignified retirement and those that can't."


“Super is already a great economic leveller for most Australians but we need to do more to avoid us ending up as a divided nation, with millions of women and low-income earners scraping by just on the aged pension.”


“The government needs to keep policy stable and stick with the legislated increases in super. That’s the proven and best way to get workers savings and the economy growing again.”


“The community know that they’ll end up carrying the can for any more policy shocks by having to work for longer to make up lost ground or paying higher taxes to support higher pension payments.”


27 July 2020.