The proposed changes to the age pension in the federal Budget would have the heaviest impact on average income earners, says Industry Super Australia.
According to research commissioned by Industry Super Australia and conducted by Rice Warner, many middle-income Australians will lose more than $100,000 over their retirement period.
Industry Super Australia chief executive David Whiteley said, “the impacts of these changes are very significant for most of the working population”.
“Executed in isolation they will reduce retirement incomes of middle-income earners, not the well-heeled.
“We seriously doubt this was the government’s intention but these are the consequences when such changes are considered in isolation from the superannuation system,” Mr Whiteley said.
According to Rice Warner, for couples due to retire in 10 years with average earnings of $62,000, $112,000 per person will be lost over the retirement period.
For those 20 years from retirement and earning approximately $45,000, $1,600 per year per person will be lost.
Comparatively, a couple earning $145,000 each will lose $136 per year per person.
“The data makes a strong case for examining the interaction of the age pension with the super system, with consideration of a more efficient, equitable structure to increase self-reliance in retirement for as many people as possible,” Mr Whiteley said.
“If the government wants to significantly scale back the age pension then it must offset the impact by making serious reforms to super to fill the retirement income gap.
“At a minimum, changes need to include fast-tracking the Super Guarantee and restructuring tax concessions at the higher and lower ends of the income scale,” he said.
Within 10 years, around half of all retirees leaving the workforce will be affected by pension changes.
Those affected will double from 1 in 3 today to around 7 in 10 by 2055.