The Financial Services Council (FSC) has expressed its approval of the government’s recognition of superannuation as the primary and efficient means to finance the retirement of Australians following the release of the 2023 Intergenerational Report.
The report, released today, projects the outlook for the economy and the government’s budget to 2062/63 and revealed dependence on the age pension to fund retirements is likely to drop over the next 40 years.
“The Intergenerational Report identifies the important role of superannuation in addressing Australia’s financial pressures over the long term, with compulsory superannuation driving the reduction in the cost of the age pension from 2.3 per cent to 2 per cent of GDP (gross domestic product) over the next four decades,” FSC chief executive Blake Briggs stated.
“Eight hundred Australians are retiring every day and the government is right to prioritise action to make sure these consumers can choose from a range of products consistent with superannuation’s promise of delivering income for a dignified retirement.”
While Briggs supported the government’s push for more diverse superannuation options for Australians, he believed further improvements are needed for a more efficient system.
“The retirement income covenant requires superannuation funds to formulate strategies to optimise retirement outcomes for members, however, the FSC believes this framework will be more successful if the government removes regulatory barriers that are inconsistent with the covenant,” he noted.
“FSC research has projected that by designing more efficient retirement policy settings the government could boost retirees’ incomes by 10 per cent annually, or a cumulative $397 billion by 2050, without changing contribution rates or creating uncertainty through additional tax increases.
“The amount of superannuation benefits left each year as a bequest would be halved by 2060, ensuring superannuation is primarily used up as income for retirement and supporting the sustainability of the federal budget.
“These goals can be achieved without resorting to additional taxes on Australians who are doing the right thing by saving for their own retirement.”