Australia’s retirement system should be overhauled to be fairer, simpler and more efficient, according to the Actuaries Institute, as it releases the results of a year-long review into the system.
In a report ‘Securing Adequate Retirement Incomes for an Ageing Australia’, the Actuaries Institute conducted a year-long review with more than 200 actuaries to establish a policy review of retirement savings.
The report examined the role of the family home in retirement income provision, how advice resulted in better use of superannuation savings, preservation of superannuation savings and the Age Pension means test, among others.
Recommendations included simplifying the Age Pension, encouraging retirement product innovation, developing best practice in financial advice and improving the interaction between retirement income and aged care.
It also wanted removal of disincentives for Australians who wanted to work longer and greater flexibility in the role of the family home in retirement income provisioning.
Actuaries Institute chief executive, Elayne Grace, said: “There are equity and intergenerational fairness issues, including for those excluded from the superannuation guarantee. Gaps need to be addressed. While the system is sound and broadly sustainable, it is widely recognised that there is scope for further reform to improve outcomes.
“The ‘three pillars’ of compulsory superannuation, the Age Pension and voluntary savings mean that individuals are required to make complex choices about how much to save and consume, and how to invest. We support simplifying Age Pension means testing, improving the interaction between the retirement income and aged care systems, encouraging innovation in retirement products, and developing best practice in the provision of financial advice and guidance.”
Andrew Boal, convenor of the organisation’s retirement strategy group, added the Government had work to do on housing including greater assistance for renters who were unable to obtain a mortgage.
“There is a large gap in outcomes for those who do and those who don’t own their own home at retirement,” he said.
“There should be greater assistance for retirees who rent. The system favours homeowners; for example, the principal residence is wholly exempt from the Age Pension asset test.”
It said it strongly supported the Government’s planned retirement income covenant.