As Budget week begins, the Financial Services Council welcomes the tightening of the age pension announced by Minister for Social Services, Scott Morrison.
This is one step towards developing a national retirement policy.
A national retirement policy would ensure superannuation and social security systems work together and factor in housing and aged care.
The FSC has long been concerned that the stability of the retirement system is being undermined by over-generous eligibility rules that enable couples who own their own home and have over $1 million in assets to continue to receive the age pension.
The Government’s announcement raises the threshold for the full age pension, thereby improving the living standards of lower income retirees, whilst also increasing the taper rate to ensure that higher income retirees are required to spend their private savings before they fall back on the Government purse. These reforms improve the integrity and targeting of the retirement system.
Research by Rice Warner Actuaries has recently demonstrated that there are over 850,000 retirees receiving a partial Age Pension, or 36 per cent of the total retiree population. This rate was significantly increased when the Howard Government reduced the taper rates for the asset test for the age pension and the Abbott Government’s reforms go some way to putting the pension system on a more sustainable path.
Sally Loane, CEO of the Financial Services Council, said: “The FSC supports the Government’s reforms to promote the integrity and sustainability of the pension system. The reforms are fair and balanced.”
“Pension reforms must be part of a national debate on a holistic retirement policy. The age pension, superannuation and tax systems must be aligned to deliver fairer and better outcomes for Australia’s ageing community.”
“We must look at retirement policy holistically and we have a responsibility to design a national retirement policy that removes dependency on the public purse.”
“Welfare is for Australians who genuinely need a safety net. Superannuation is the vehicle for helping Australian retirees save to provide for their own retirement and we expect the tax white paper process to focus on how to improve the super system to deliver this outcome.”
