Plans by federal Treasurer Josh Frydenberg to commission a review of the retirement income system have been welcomed by the Institute of Public Accountants (IPA), which claimed such an examination was long overdue.
The review, which was one of the recommendations from the Productivity Commission’s superannuation report, will examine the interaction between super, pensions and taxation and was flagged in an interview with The Australian Financial Review last weekend.
Details of the review would be released after Frydenberg spoke with his cabinet colleagues and Treasury, but IPA chief executive Andrew Conway said the institute welcomed an examination of the three areas and how they interact to shape retirement outcomes.
“The review is long overdue. The importance of trying to define what retirement living standard the system should aim for is not well defined,” Conway said.
“There is also the budgetary considerations of funding the age pension and superannuation tax concessions and ensuring that the system is sustainable going forward.”
He also pointed out greater investment in superannuation needed to take place to enable self-funded retirement and the growth of the latter was important as fully funded government pensions would come under pressure with an increase in the ageing population.
A range of mechanisms should be considered given the longevity risk superannuation members will face at retirement and this included the development of annuity-type products, he added.
“There is significant complexity in the system with many competing interests, which must all be given due weight if we are to develop an equitable retirement income system,” he said, adding recommendations from the Productivity Commission to reduce costs and increase returns for fund members should not be ignored.