14 May 099 Report on the retirement income systemIn a media release issued on 12 May 2009, the Australia's Future Tax System Review Panel referred to the release, by the Government, of the report prepared it into the retirement income system.
The Panel's key finding is that the three-pillar architecture of Australia's retirement income system - consisting of the means tested Age Pension, compulsory saving through the superannuation guarantee and voluntary saving for retirement - should be retained. The retirement income system is facing increasing challenges as the 21st century unfolds which will test the sustainability, adequacy, acceptability and coherence of the system. The three-pillar architecture is well suited for a balanced and flexible response to these challenges.
However, there is a need for some adaptive change to calibrate the three pillars so the system serves its purposes and retains its strengths.
The Panel recommends:
- maintaining the superannuation guarantee at 9%t, not extending the superannuation guarantee to the self employed and retaining the $450 per month threshold;
- gradually increasing the Age Pension age to 67 years;
- - gradually aligning the age at which people can access their superannuation savings (the preservation age) with the increased Age Pension age;
- improving the fairness and coherence of the pension means tests, possibly through a single test, and improve incentives to work beyond retirement age;
- reducing the complexities resulting from the interactions between the tax-transfer system and the aged care sector;
- maintaining tax assistance to superannuation but improving the fairness of concessions for contributions, including by broadening access to them, and considering whether the current cap on concessions is appropriate;
- improving the ability of people to use their superannuation to manage longevity risk; and
- improving the awareness and engagement of individuals with the retirement income system.
For a copy of Australia's Future Tax System - The Retirement Income System: Report on Strategic Issues, May 2009, go here.