The SMSF Association has commended the Productivity Commission’s (PC) report on superannuation policy for post-retirement, which highlighted retirees were prudent with their savings, but warned of preservation age perils.
“This finding by the commission confirms what the association has always believed – give people an opportunity to build retirement savings and they will use them appropriately to fund their retirement,” SMSF Association chief executive Andrea Slattery said today.
“Certainly this has been an important feature in the success of the SMSF sector where 93 per cent of retirement benefits are drawn down in the form of an income stream and not taken as a lump sum.”
Slattery added the report was another important contribution to the debate around Australia’s retirement income policy structures, providing significant insights into how the system could be improved.
“But the association is wary of some aspects of the report,” she said.
“The PC’s suggestion that an increased preservation age could lead to benefits of increased retirement savings balances and savings to government revenue must be heeded with caution.
“Increasing the preservation age is a complex policy option that can impact those that are unable to work past 60 due to illness or physical issues or are retrenched late in their careers.
“They may be forced to rely on social security, so sufficient flexibility should be maintained for them to access their superannuation savings when appropriate.”
Ultimately, significant changes to super policy in the post-retirement phase should be considered in the context of the broader retirement income system, encapsulating social security, super and tax policy, she added.
“We are pleased that the PC recognises this with their suggestion that policy changes should be considered in a broader review of retirement incomes policy,” she said.