We know that generation X and Y already place a high value on a healthy work/life balance. It’s likely that many in this age group – as well as older workers – will be reluctant to contribute extra money into super if they have to wait until age 67 to access their money – and let’s not forget (because they certainly won’t) that super is their money. This could have serious consequences, not just for people’s retirement income balances, but for the economy as a whole and our national savings pool.
At the very least, voluntary super savings should not be preserved to age 67. There were other recommendations and changes announced on Budget night that are of a concern to AIST. While supportive of the Government’s move to address some of the inequities in the current superannuation system, we believe that the new rules on concessional tax limits could hamper plans for last-minute and much-needed super top-ups among the over 50s. AIST recognises that the existing concessional caps favoured high income earners and supports the reduction for younger workers who are many years away from retirement.
However we would like to see the Government either extend the transition period past 2012 for those over aged 50 or allow this age group a higher cap, even if not quite as generous as before. And while the interim Henry Review report has some good recommendations around retirement issues – notably one single means test, thoughts on better longevity products and integrating health and ageing – we remain concerned about recommendations for: no increase in the superannuation guarantee from the current 9 percent; no inclusion of the self-employed in compulsory super; no removal of the $450 monthly income threshold and a review to consider further increases in pension eligibility age – ie beyond age 67 – in 2020.
AIST believes that the Henry Review – which is set to deliver its final report in December – is a golden opportunity to help deliver a retirement income system that integrates all aspects of retirement; is fair and equitable; and sets us on a path that will provide Australians with confidence and certainty when planning for their retirement years. But we also need to be mindful that – in this current climate of economic uncertainty and a fall in voluntary super savings – the danger exists that Australians will turn away from super if it starts to sound too hard, less attractive and undergoes too many changes as successive Governments come and go.