The federal government has commissioned an independent review of the retirement income system following a recommendation by the Productivity Commission.
Treasurer Josh Frydenberg said: “The review will look at the three pillars of the existing retirement income system, being the Age Pension, compulsory superannuation and voluntary savings.”
“In doing so, the review will cover the current state of the system and how it will perform in the future as Australians live longer and the population ages.”
Specifically, the terms of reference for the review as outlined by Frydenberg were:
- how the retirement income system supports Australians in retirement,
- the role of each pillar in supporting Australians through retirement,
- distributional impacts across the population and over time, and
- the impact of current policy settings on public finances.
The review will be conducted by an independent three-person panel chaired by former senior Treasury official Michael Callaghan.
The consultation paper is expected to be released in November, with the final report provided to government by June 2020.
The review was welcomed by Industry Super Australia (ISA) and the Financial Services Council (FSC), both of which highlighted the importance of not allowing the review to overshadow reforms already committed to by the Government.
ISA chief executive Bernie Dean said: “This review provides an important opportunity to build on the reform priorities already outlined, and improve the system to deliver better outcomes for members and Australians in retirement.”
“What we don’t want to see is issues which we know are a huge drain on the system – such as underperformance – sidelined while the review is taking place.”
FSC chief executive Sally Loane said: “This review should not delay important reforms that the government has already committed to that will significantly improve consumer outcomes in superannuation.”
In addition, the ISA highlighted the potential impact of the review on the government’s commitment to increasing the Superannuation Guarantee (SG) levy to 12 per cent.
“With the SG legislated to increase to 12 per cent by 2025, ISA agrees with the government that sensible, and evidence-based reform is needed to improve the efficiency of the compulsory savings system and ensure that members get even more out of every dollar they’ve been promised,” it said.
The FSC also noted its intention to suggest to the review the Government retain its policy increasing the SG to 12 per cent.
Shadow Treasurer Jim Chalmers said: “After six years of attacks on retirees and older Australians, Scott Morrison and Josh Frydenberg must rule out the possibility that this review will become a stalking horse for cutting the pension, including the family home in the pension asset test, and further delaying the legislated increase in the SG to 12 per cent.”