Australia’s ageing population is in the spotlight, and dealing with the financial fallout is high on the government’s agenda as a retirement income review gets under way.
Retirees are likely to face fresh rule changes affecting their finances as the Federal Government ramps up its review into retirement incomes.
Superannuation, the age pension, savings and home ownership are being examined in the review, with its independent panel required to hand a final report to the government by June next year.
When announcing the review in September, Treasurer Josh Frydenberg avoided a political firestorm by ruling out including the family home in the age pension assets test.
However, he sparked a separate storm last week by calling for people in their mid to late 60s to work longer and retrain – earning a barrage of criticism from Baby Boomers.
Finance specialists say the retirement incomes review could lead to tougher age pension access rules, higher taxes for superannuation, an increase in the super access age and freezing employer super contributions at 10 per cent.
The age pension currently pays a maximum of $933.40 per fortnight to a single or $1407 a fortnight to a couple.
MBA Financial Strategists director Darren James said the new review had the right intent: “ensuring Australians can afford to retire and we don’t have an issue like Greece with a number of people retiring early and being unfunded”.
“Look at the demographics – we have an ageing population and can’t sustain paying an age pension the way it is under the current system,” he said.
Mr James urged pre-retirees to start planning sooner. “If you wait for government change but do nothing you could be waiting a long time,” he said.
Super changes made in recent years have reduced the amount of contributions people can put in annually, and retirees could be in for more of the same.
“We think the age at which you can access super is probably going to rise,” Mr James said.
This would follow the age pension’s qualification age rising to 67 by 2023.
Super can currently be accessed from age 60 by most Australians although some can still get it between 55 and 59.
Marinis Financial Group managing director Theo Marinis said the review would deliver “more noise, that’s all”.
“They always have reviews, but what sort of review of retirement income are you going to have if they don’t factor in your home?” he said.
“Why should someone have a $3 million home and still get Centrelink but someone with a more modest home gets nothing?”
Mr Marinis said some recent changes to super had undermined previous changes and created more complexity.
“Despite the morons in Canberra, political and bureaucratic, the system is good – we have gone from fourth best back to third best in the world,” he said.
Mr James said people needed to hedge their bets and not have all their financial eggs in the super basket. “With the stroke of a pen the government can change the rules,” he said.
Originally published as How retirement review may affect you