Business News

New pension age to emphasise super importance

The announcement changing how the age pension applies to Australians contained in last week’s budget is likely to place even more importance on superannuation savings, according to an industry commentator.

While handing down his first budget, Treasurer Joe Hockey confirmed the eligibility age for the pension would rise to 70 from 1 July 2035.

AMP SMSF head of policy and technical Peter Burgess told selfmanagedsuper an increased emphasis on a person’s individual retirement savings could occur from that amendment due to the difference in the qualifying age for the pension, being 70, and the superannuation preservation age, set to remain at 60.

“If it stays that way, I think it will perhaps encourage more people to save through superannuation, given that individuals may want to be self-funded and retire before age 70,” Burgess said.

“The only way they’re going to be able to do it is if they accumulate their own savings and we know the most tax-effective way to do that is via superannuation.

“It means superannuation is likely to become more attractive.”

He pointed out the 10-year difference between the two age thresholds would have to be maintained for the greater focus on super to become significant.

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