The FSC is calling on the Commission of Audit to recommend raising the preservation age for superannuation to relieve the increasing strain on the economy as the Australian population ages.
In response to the Productivity Commission’s report An Ageing Australia: Preparing for the Future – which projects that unless “luck or appropriate policies intervene”, net national income per capita may grow by only 1.1 per cent per annum over the next five decades – the FSC is calling for the Abbott government to commission and publish a new report to inform policy decisions on the issue.
“The Commission of Audit is the right vehicle for considering changes to the preservation age and the Productivity Commission’s recommendations on dealing with the pressures of an ageing population,” FSC director of policy and international markets Martin Codina said.
Research conducted by Rice Warner Actuaries for the FSC shows that increasing the time spent in the workforce for every Australian by just one year reduces the superannuation savings gap by $200 billion.
“Australia currently has a superannuation savings gap of $1,063 billion. That is, the difference between what is actually being saved through superannuation and what is needed to sustain a comfortable lifestyle after retirement,” Codina said.
“This significant retirement savings gap makes increasing the labour force participation of older workers in Australia a policy imperative.”
However, the government has no plans to increase the pension eligibility age.
In addition, the Australian Council of Trade Unions has rejected the suggestion and the Australian Institute of Superannuation Trustees has cautioned against it.
The Association of Superannuation Funds of Australia is urging policy makers to look at a range of factors when considering an increase to the qualifying age for the Age Pension, such as social and health-related issues.
