Powered by momentummedia
nestegg logo
Powered by momentummedia
nestegg logo
nestegg logo

Retirement

Current super system flagged as ‘failure’

By Grace Ormsby · February 06 2020
Reading:
egg
egg

Retirement

Current super system flagged as ‘failure’

By Grace Ormsby
February 06 2020
Reading:
egg
egg
Current super system flagged as failure

Current super system flagged as ‘failure’

author image
By Grace Ormsby · February 06 2020
Reading:
egg
egg
Current super system flagged as failure

Australia’s superannuation system is currently failing and will continue to fail without proper intervention that addresses long-term sustainability, fairness and adequacy, a new submission for the retirement income review has flagged.

The Retirement Income Review submission from the Self-managed Independent Superannuation Funds Association (SISFA) has said that any “effective retirement incomes strategy should aim to help most Australians to be financially independent in retirement”.

“Instead of two-thirds being dependent to some degree on the Age Pension, the aim should be to have two-thirds of Australians reliant on their own savings,” the statement read.

It called for the Age Pension to be considered “a safety net” for the disadvantaged, while noting the failures, as it stands, “will cost government more in Age Pensions costs than if the system was made to work”.

SISFA has put forward the main reasons as to why the super system is a failure, mainly focusing on issues with government policy.

Advertisement
Advertisement

The first was the 1988 government decision to accelerate the taxation of super to bring forward its tax receipts before contributions were made compulsory.

Secondly, it outlined that “the constant fiddling by governments has made the system too (unnecessarily) complicated for people to understand and adds uncertainty risk”.

It also called out the annual $25,000 cap as being too low for a large number of Australians to achieve a reasonable pension.

The last reason for the system’s failure, as outlined by the submission, was the citing of the Productivity Commission’s finding that the costs of managing funds is too high.

SISFA has submitted that the Retirement Income Review Panel should be careful “not to present the government with data and ‘facts’ relating to the current performance and position of the retirement sector”, instead using facts to improve understanding of how the current system operates.

It has fears that “this might misdirect their policy formulation to focus on ‘fixing’ perceived anomalies with the current situation to the detriment of the long-term sustainability, fairness and adequacy of the system”.

nestegg has previously queried whether Australia is headed towards a retirement crisis

A universal pension system is just one strategy that has recently been proposed to improve retirement outcomes for older Australians, while new analysis by Industry Super Australia has hit out at the “unfair” Age Pension means test

Current super system flagged as ‘failure’
Current super system flagged as failure
nestegg logo

Forward this article to a friend. Follow us on Linkedin. Join us on Facebook. Find us on Twitter for the latest updates
Rate the article
author image

About the author

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

Join the nestegg community

We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians

Your email address will be shared with nestegg and subject to our Privacy Policy

About the author

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

Join The Nest Egg community

We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians

Your email address will be shared with nestegg and subject to our Privacy Policy

From the web

Recommended by Spike Native Network

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.