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Higher preservation age to save $7 billion

Higher preservation age to save $7 billion

Reporter
— 1 minute read

A new report by the Productivity Commission has found that an increase in the preservation age to 65 would save taxpayers $7 billion.

As well as discussing the benefits of increasing the age pension, the Productivity Commission report also found that the majority of Australians do not take their superannuation as a lump sum.

Financial Services Council chief executive Sally Loane said the tax system would "not be able to support future generations if they continue to retire at 60".

"Australians must consider the benefits to their retirement savings of working until 65 years," Ms Loane said.

"Higher workforce participation among older workers will strengthen our retirement system and reduce the pressure of the cost of ageing on future budgets.

"Changes in regulation are needed so Australians can have access to retirement products that provide an income stream when they stop working," she added.

Association of Superannuation Funds of Australia chief executive Pauline Vamos said the Productivity Commission report confirmed there is no urgency to make changes to superannuation immediately.

"The superannuation system is operating well, and is already reducing the cost of the age pension by $7 billion a year," Ms Vamos said.

"The proportion of people expected to receive the full pension has fallen from 44 per cent in 2000 to 25 per cent, and will fall to 22 per cent by 2023," she said.

"Ideally, the preservation age would be linked to the age pension age, and would be set to be five years less than the age pension age, but capped at 62 years of age.

"If this were done then the preservation age would increase automatically, and in synchronisation with the age pension eligibility age," Ms Vamos said.

 

Higher preservation age to save $7 billion
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