Last month’s Budget was bad for superannuation on several counts – particularly the long count up to 67, writies AIST chief executive offier FIONA REYNOLDS.
67 is not a cool number. It looks like being the watercooler topic of 2009. At what age do you plan to retire? Ask your work colleagues this question and very few of them are likely to express a desire to work until the age of 60, let alone 67 – which is the eligibility age for the pension that the Federal Government proposes to introduce in stages from 2017 to 2023. Calls to lift the superannuation preservation age from the present 55-60 age threshold to 67 are equally unpopular.
Indeed a recent Age/Nielsen poll suggests only 40 per cent of workers support a lift in age pension eligibility and 56 per cent are opposed to it. Speaking at AIST’s post-budget analysis breakfast in Sydney last month, the Minister for Superannuation and Corporate Law, Nick Sherry, said Australia’s rapidly ageing population, coupled with the dramatic increase in average life expectancy, meant the Government had little choice but to increase the pension eligibility age.
During question time, Sherry noted that the life expectancy of his nine year old daughter was over 90 years; that she would probably live until the next century; and could be expected to enjoy a very long retirement. While recognising the need to ensure that our age pension system is economically sustainable over the longterm and doesn’t become an onerous cost burden on younger generations, AIST remains concerned that raising the retirement age to 67 will impose an unfair burden on many manual workers who find it both physically challenging to retain work and also difficult to find work past a certain age.
We believe there are better ways to look at retirement provision – by encouraging self-provision for those who can afford it and by providing incentives to delay taking the age pension for those who can work past retirement age. We are also concerned that lifting the preservation age (one of several key recommendations in the interim report of the Henry Review released on Budget night) will see a drift away from superannuation savings. AIST believes that that the superannuation preservation age should remain significantly lower than the pension qualifying age to allow flexibility for those who retire earlier to access their retirement savings.