EXCLUSIVE The original role of the age pension framework as a safety net has been transformed and has simply not kept pace with Australia’s changing lifestyles and demographics, according to a dealer group head.
In a contributed blog exclusively for ifa, Lifespan Financial Planning chief executive Eugene Ardino noted that since the Commonwealth age pension was introduced in Australia in 1909, life expectancy has gone up 25 years for men, to 80.5 years, and 26 years for women, to 84.6 years.
However, the age pension eligibility age has increased by just one year for men and six years for women.
“With many Australians now enjoying a good 30 years of retirement, clearly, something’s gotta give. The age pension framework has simply not kept pace with Australia’s changing lifestyles and demographics,” Mr Ardino said.
“Its original role as a safety net has been transformed. The age pension now primarily serves as a supplementary source of income to superannuation savings.”
Mr Ardino’s comments come as the government undertakes a review into retirement income that aims to examine the age pension, the superannuation guarantee (SG) and voluntary contributions.
He noted that recent research has shown more than half of Australians aged 66 are not accessing the aged pension at all because their assets and incomes are too high, and only 20 per cent are on a part pension.
As a result, he urged the review panel members to consider shifting the focus of the review into super from the accumulation phase to the draw down phase.
“The focus now needs to shift to helping all Australians achieve their income needs and goals in retirement,” Mr Ardino said.
“There are a number of obstacles that need to be removed, or at least addressed, in order to optimise superannuation savings for the average Australian such as housing affordability, wages growth and persistently low interest rates. There is also the issue of too many women still retiring with inadequate superannuation balances.
“The first generation of contributors to our compulsory superannuation system is about to hit retirement. Super funds must be prepared to meet the retirement income needs of this group.”
Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.
You can contact him on [email protected].
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