NEWS – Renewed debate on lifting Govt. Age Pension to 70, following Intergenerational Report (IGR)

Renewed debate on lifting Govt. Age Pension to 70, following Intergenerational Report (IGR)

Renewed debate on lifting Govt. Age Pension to 70, following Intergenerational Report (IGR)

How will the government have enough revenue in years to come if the continued trend of less workers (from 4.5 presently, to 2.7 by 2055 of workers per retiree over 65)? Is ASIT CEO correct that raising Age Pension eligibility to 67 is adequate, or is the FSC CEO’s call to consider facing reality, the best way forward?

Tim Stewart of Investor Daily details these views –
The release of the federal government’s Intergenerational Report (IGR) has reignited debate about the government’s proposal to lift the age pension eligibility to 70 by 2035. The report, released yesterday by Treasurer Joe Hockey, projected that the number of Australians aged 65 and over will double by 2055 from the number today. Male life expectancy is projected to increase from 91.5 today to 95.1 in 2055, while female life expectancy will increase from 93.6 today to 96.6 in 40 years’ time, according to the IGR.

The number of people aged 100 or older is projected to hit 40,000 by 2055 – compared to the 122 Australian centenarians alive today.

Commenting on the report, Financial Services Council chief executive Sally Loane said it was time to “face the reality” that Australians are living longer and will need to work longer to achieve a comfortable retirement.

“By 2055, there will be [only] 2.7 working Australians for every Australian over 65 compared with [the] 4.5 at present,” Ms Loane said.

“Seventy per cent of retirees currently receive a pension. This level of social welfare cannot be sustained.”

Ms Loane reiterated calls she made in her recent maiden speech as chief executive of the FSC for a rethink about the relationship between superannuation and the age pension.

“The expectation should be that super is a replacement for the pension, not a top-up, and the age pension needs to be considered as a safety net for those who cannot provide for their own retirement,” she said.

“Good policy decisions now will ensure that future generations are not paying for an overly generous pension system which we can no longer afford.”

But the Australian Institute of Superannuation Trustees’ (AIST’s) chief executive Tom Garcia opposed any increase to the age pension eligibility age, arguing that previous moves to increase the age to 67 were an adequate response to Australia’s changing demographics.

“Raising the retirement age is a very blunt tool that will hurt a lot of involuntary retirees who – for all sorts of legitimate reasons – cannot work longer,” Mr Garcia said.

“The IGR shows that there is no need to panic. Increasingly productivity, higher labour-force participation, a maturing superannuation system and a sustainable age pension system will all contribute to building a stronger Australia,” he said.

The existing envisaged increase in the eligibility age from 65 to 67 over time will see government expenditure on age and service pensions rise from 2.9 per cent of GDP to 3.6 per cent of GDP in 2055, AIST said.

“This is much lower than almost every other OECD economy,” the institute said.

What about comments by Ross Gittins at The Age

“The message we should take away from it, as with its three predecessors, is one no politician on either side is prepared to admit: as our demands on the government for more and better services continue to grow, we will have pay for them with higher taxes. Since our real incomes are projected to rise by almost 80 per cent, this won’t be so terrible.”

What are your thoughts? Make your comments below!

Get our FREE Expert Guide – Self-Managed Super and You – It has all the info you need to know, with bonus TIPS and CHECKLISTS  to determine if SMSF is for you and what steps are needed to set up. It also gives you ALL the Aust Tax Office publications about SMSF. Get you copy now – Click “Free Download” top right hand side above. You’ll also get monthly SMSF news, investment teaching and upcoming seminar and workshop briefs! Download your FREE Guide now!


About SuperBenefitnews

Self-Managed Superannuation Service Providers in Australia. SuperBenefit provides a wholistic SMSF assistance, education and administration service continuum - 1. “assistance” is help of whatsoever nature where our overall SMSF experience and knowledge enables us to provide assistance/help without any legal (or “license”) limitations. 2. “education” involves providing knowledge through teaching, coaching and mentoring about all matters SMSF, including (but not limited to) investment issues such as equities and property, 3. “administration” encompasses all admin aspects of legally required SMSF trustee and member record keeping including (but not limited to) audit and ATO matters. In keeping with our key point that SuperBenefit does not provide Financial Advice, where issues arise from 1, 2, and/or 3 above Indicate a need for a legally authorized provider (such as a Financial Adviser) and the client does not have their own service provider, the client can utilize SuperBenefit’s ‘Connect Assist’ … SuperBenefit, in itself, does not provide Financial Advice, but it does provide the wherewithal for great SMSF service. WE do not provide Financial Advice or any other service that requires a legally authorized provider. However, where such advice or service is required we have our ‘Connect Assist’, a SuperBenefit resource we use to connect clients to a Licensed Advisor or other legally authorised service provider. Call us 0407 361 596, no obligation FREE Connection call to see how we can help you!
This entry was posted in 2 Past Newsletter Topics, News & Stats, Retirement Planning, SMSF Info, SMSF Investing, Superannuation General and tagged , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s