<strong style="font-size: 13.
0080003738403px; line-height: 1.538em;”>Read the Productivity Commission’s research in full at the end of the article
New modelling from the Productivity Commission stated that the government could save $7 billion a year towards the middle of the century if they barred Australians from accessing their super until they turn 65.
The “Superannuation Policy for Post-Retirement” modelling – released on Tuesday – also suggested that households that delay their retirement would be expected to do so by two years and see their super savings increase by about 10 per cent by the time they retire.
The Abbott Government has repeatedly ruled out major changes to the superannuation system, for what researcher Simon Cowan described as “political reasons”.
Mr Cowan, a research fellow with classical liberal think tank The Centre for Independent Studies, said the country’s aging population would in time “make it inevitable” for the government to tackle the issue.
“There is a significant need to change retirement income policy,” he said.
“Only 33 per cent of retirees will be able to fund themselves in retirement. The bulk of people will be on the pension.”
Listen: Stephanie Anderson speaks with Simon Cowan
Mr Cowan said the report highlighted the lack of pensioners drawing on housing equity, despite the Productivity Commission stating that the family home accounted for around half of household wealth.
He said the family home, which was made exempt from the assets test for the Age Pension in 1912, needed to be addressed as a source of income for retirees.
“People aren’t accessing that home equity to support themselves,” he said.
“$625 billion worth of home equity is sitting with pensioners and not being used to fund retirement, and the impact of that is clear. We’re still seeing huge numbers of people on the pension, struggling to meet daily needs while maintaining this enormous asset to pass onto their kids.”
$7 billion super saving a ‘drop in the ocean’
The Abbott Government has ruled out including the family home in the pension asset test, as well as major changes to the superannuation system.
Acting Treasurer Bruce Billson again dismissed the notion on Tuesday, telling the ABC that the expected $7 billion in savings would be a “drop in the ocean”.
“The Productivity Commission report is a useful contribution to the tax white paper process, but that’s it,” he said.
The federal opposition believes making people wait longer to access their super would be a retrograde step and wants Prime Minister Tony Abbott to rule out the changes.
Labor has called on the government to rule out increasing to 65 the age Australians can first access their superannuation.
Shadow Treasurer Chris Bowen told the ABC that making people wait longer to access their super would be a retrograde step.
“Clearly the Prime Minister should rule that out today,” he said.
Impact on older Aboriginal and Torres Strait Islanders
The modelling also highlighted the concerns for older Aboriginal and Torres Strait Islander Australians, who on average have lower superannuation coverage and lower balances than the general population.
It stated that superannuation coverage for Aboriginal and Torres Strait Islander men was around 70 per cent and coverage for women was around 60 per cent in 2010, around 15 per cent and 20 per cent less than the broader population respectively.
These disparities arise in large part due to differences in paid labour force participation, the report stated.
“Aboriginal and Torres Strait Islander men had on average just over $55 000 in superannuation savings, relative to $110 000 for men in the broader population,” it read.
“For women the respective figures are just under $40,000 and $63,000. Median balances for both Aboriginal and Torres Strait Islander men and women are much lower at $14,000 and $15,000.”
The report also stated that the complexity of the superannuation system also made it hard for older Aboriginal and Torres Strait Islanders to access their savings.
“Aboriginal and Torres Strait Islander Australians face shorter life expectancies and higher incidences of chronic illness and poverty relative to the rest of the community,” it read.
“While this group may be more inclined to need to withdraw their superannuation early, the administrative requirements — such as having letters from both a medical practitioner and a specialist where funds are being used to pay for medical treatment — appear to impact disproportionately on this group.”