Australia’s retirement incomes framework is the envy of the world but we know it can always be better.
That’s why we’ve spent the first term of this Albanese Labor Government strengthening it – with Assistant Treasurer Stephen Jones, other colleagues and counterparts, and many of you working in this really important part of our economy.
Super is one of the great public policy achievements in our history and we want it to continue to deliver a dignified retirement for more Australians and help build a more prosperous and more resilient economy at the same time.
Our reform agenda is ambitious, whether that’s improving reporting transparency, paying super on Paid Parental Leave and on payday, to help ensure the system is genuinely compulsory and workers aren’t missing out, or a whole range of other important changes.
All these reforms are about advancing the objective of super we’re looking to enshrine in law, which is “to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.
Which brings me to why I’m excited to see this new magazine come to fruition.
The pace of change in the global economy is accelerating and there’s always more to be done.
We identified five big shifts that will shape our economy and fiscal position over the next 40 years in our first Intergenerational Report, published in the back half of last year.
Those shifts were from hydrocarbons to renewables; IT to AI; globalisation to fragmentation; younger to older populations; and the bigger role the services sector will play, particularly as the country ages.
The flow of capital in our economy will help determine whether we succeed or fail amidst all this churn and change, and our almost $4 trillion super sector will be key.
Our ageing population makes retirement incomes more important than ever.
The numbers tell the story.
In the next decade alone, an extra 2.5 million Australians will move into retirement.
In the next four decades, the number of people who are more than 65 years old will more than double and the number of people aged 85 and over will more than triple.
As more people retire, drawdowns from superannuation are estimated to increase from about 2.4 per cent of GDP in the 2022-23 financial year to 5.6 per cent of GDP in 2062-63.
With more Australians getting older and leaving the workforce, the focus is now shifting to how we can support people as they draw down on their super and retire with dignity.
At the same time, Australians are living healthier, longer lives. This is a good thing but can make retirees understandably anxious about outliving their savings.
One of the problems here is that most retirees do not have access to the appropriate products to help them maximise their super over their lifetime.
That’s why we’ve been discussing with the super sector and community about how we can improve the retirement phase of super.
We opened this conversation in December last year and sought views from industry, academia, regulators and the wider community.
We’ve received almost 100 submissions with great ideas on how to help members navigate the retirement income system and how we can make sure people have access to the right investment products, and we’re working through the options in a considered and methodical way.
Consultation and collaboration are the best way to make and bed down the necessary reforms we need to strengthen our retirement incomes regime for the future.
This is why I’m grateful to Conexus Financial and managing director Colin Tate for the invitation to write this foreword, and why I jumped at the opportunity.
This article was published in the inaugural October edition of Retirement Magazine.
