Rice Warner has criticised research from a number of thinktanks in the presentation of its data around retirees and pension access.
While acknowledging that in some instances this was correct, it was not presented with the full context.
To provide an example, it said that while Challenger’s report noting that half of 67-year-olds are not accessing the pension was correct, it was incorrectly represented because 67-year-olds are still earning an income, so they are not actually self-funded retirees.
Rice Warner also questioned the Grattan Institute’s findings, which argued that an increase in the superannuation guarantee (SG) would see the government and the middle-class facing increased costs.
Rice Warner’s own modelling considered that superannuation will do its job in reducing reliance on the Age Pension.
It has argued that such an increase would reduce the expected burden of older Australians on the GDP from 2.6 per cent to 2.1 per cent by the end of the century.
It would also enable dependence on the Age Pension to fall in the foreseeable future.
To completely remove the Age Pension, Rice Warner has estimated that compulsory superannuation levels would need to be increased up to 15 to 20 per cent.
It flagged that at a rate of 10 to 12 per cent, it would shift the burden primarily to super with some support from the Age Pension, which Rice Warner argued would be an effective system.
The real-world reasoning for dependency levels
Rice Warner further noted that low levels of dependency at younger retirement ages is reflective of higher levels of workforce participation at these ages.
This is opposed to the impact of the means test alone, it said.
For example, of those aged 66, Rice Warner estimated that around 17 per cent are still in employment, while only 36 per cent are truly self-funded.
Looking to those five years older, at age 71, the proportion living independently of the pension is much lower.
According to Rice Warner, at this age, 5 per cent are employed and just 28 per cent are self-funded.
This is reportedly proof that consumption over time pushes some retirees onto part-pensions.
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