An alliance of retiree groups has warned the government that the nation’s economic recovery is at risk after the COVID-19 crisis dampened the confidence of retired investors.
The Alliance for a Fairer Retirement System, which includes a number of organisations representing older Australians including the Australian Shareholders Association, Australian Investors Association and National Seniors Australia, has written to the Treasurer and other ministers about problems facing retired investors during the current market volatility.
The letter has pointed to issues including high deeming and taper rates associated with the pension income and assets tests, a low investment return market and a range of market, longevity and regulatory risks.
It has urged for a number of policy changes, including automatic revaluation of assets by Centrelink to account for market falls, further reduction of deeming rates and an adjustment of the pension assets test taper rate.
National Seniors Australia chief advocate and Alliance spokesperson Ian Henschke said retirees with market investments are being punished financially, undermining their capacity to contribute to the economic recovery.
“Things are not helped by a retirement income architecture which still deems people to be earning more than what they actually are, or a system which either ignores or is deaf to retired investors who have seen their income evaporate during this crisis,” Mr Henschke said.
“With around 3.8 million Australians aged 66 and over, it is important to understand the enormous contribution this section of society has [to] the overall economy.
“Retirees are the single most important contributor to discretionary spending. Retirees don’t just invest in the share market, but also in their community. Retiree spending and willingness to spend, [have] a critical impact on the economy, both now and in the post-stimulus recovery phase.”
The alliance has warned the crisis has led to a lack of confidence, with older Australians showing signs of a drop in spending.
“The latest figures from Challenger show that older Australians are already cutting back on spending on food by 27 per cent and 37 per cent on clothing,” Mr Henschke said.
“There are good economic reasons to support retirees through the crisis, not least because of the risk to their confidence and consumption.”
The Challenger data released earlier this month indicated 65 per cent of retirees feel concerned about their retirement income, with almost half (49 per cent) not feeling confident about their financial security during the next five years.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
Former CEO of ING Direct Vaughn Richtor will assume the role of chairman at MyState following the retirement of Miles Hampton, the compan...