The independent review, recommended by the Productivity Commission, established a panel that has been tasked with establishing a fact base — that is, it will not be making “recommendations”.
The review is intended to help improve understanding of how the Australian retirement income system is operating and how it will respond to an ageing society. It will identify:
- how the retirement income system supports Australians in retirement
- the role of each pillar in supporting Australians through retirement
- distributional impacts across the population and over time, and
- the impact of current policy settings on public finances.
The review starts by establishing that the present retirement system consists of three pillars, which ensures all Australians have some income support in old age, and encourages individuals to make provisions during their working lives to support their retirement needs.
The three pillars of Australia’s retirement income system consist of:
- a publicly funded and means tested safety net in the form of the Age Pension;
- compulsory savings through the superannuation guarantee (SG); and
- voluntary savings through additional superannuation contributions and other financial or non-financial assets.
The paper refers to research and notes that the minimum superannuation pension drawdown levels, combined with the Age Pension, can result in income growing in retirement whereas studies have shown that costs in retirement tend to be constant or shrinking. “This may result in retirees having higher overall retirement income at a time when they are less likely to have significant expenses, and lower income when retirees are more active and may wish to have higher expenditure.”
It is expected that a report will be given to the government by June 2020. The consultation paper outlines some of the issues the panel will be considering and is intended as a guide to those making a submission.
The panel welcomes contributions and invites submissions from the Australian community on the issues and material it should examine as it considers the current state of the retirement income system and how it will perform in the future.
The last day for comments is 3 February 2020. Email firstname.lastname@example.org