When it comes to retirement income, Aussies want to have their cake and eat it too.
A new report reveals that two-thirds of Australians acknowledge an ageing population comes with a higher pension price burden, and 75 per cent predict a higher public health care bill. However, just 10.5 per cent think lowering the age pension is a good idea, and 7.7 per cent think raising taxes is the way forward.
Chartered Accountants Australia and New Zealand’s (CA ANZ) latest report, Population Ageing; Do we understand and accept the challenge?, finds both Australians and New Zealanders have long histories of publicly-funded pensions but that Australia’s compulsory superannuation and New Zealand’s voluntary scheme have seen numerous reforms over the last 30 years.
This could be leading to “reform fatigue” among older citizens, the head of superannuation at CA ANZ, Tony Negline, said.
Continuing, he said politicians are also in a tricky position as they attempt to straddle voters’ wants with the unavoidable tax needs. It doesn’t help that only 48 per cent of New Zealand couples and 41 per cent of Australian couples believe they could “get by” on the publicly-funded pension.
‘Between a rock and a hard place’
According to the research, there is simultaneously a “real gap when it comes to knowledge about the level of payment and how the schemes are funded”.
Thirty per cent of Australians and 50 per cent of New Zealanders believe the publicly-funded pensions come from money the government has saved and invested over time, rather than through taxes.
Interestingly, respondents understand publicly-funded pensions and public health expenses will cost more in the future.
“Politicians are caught between a rock and a hard place – the public don’t want change, despite knowing the system will cost significantly more in the future,” Mr Negline summarised.
Funding the future
When it comes to how to fund these increases, the strongest opposition was to reductions to the pension paid with mixed support for options like changing the age of entitlement or the means testing used to determine the amount paid.
While income and asset testing received the highest support – albeit with a low bar – respondents across all age groups, genders, incomes, employment-statuses and location agreed including the family home in the test should not occur.
The average support for a reduced pension pay-out across all age groups in Australia was 10.5 per cent, with support highest among Australians 65 and over (16 per cent) and weakest among those between 18 and 25 (7 per cent).
However, increasing taxes received an even-more lukewarm response; just 2 per cent of Australians between 25 and 34 list raising taxes as their preferred option, while 11 per cent of those between 55 and 64 express support. The average support sits at 7.7 per cent.
On the other end of the spectrum, “paying less government pension to people who have more assets or income from other sources” received average support across all age groups of 42.3 per cent, with support highest among 25 to 34-year-olds (53 per cent).
“The clear finding from our survey is that we need more than public education to change this debate,” Mr Negline concluded.
“Meaningful and successful reform will need a range of supporting factors – an electoral mandate, leadership, cohesion and persistence.”
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