What’s super about uncertainty?
With the budget lifting the aged pension access age to 70 by 2035, affecting those born after 1965, what’s to become of our superannuation system? Our Treasure, Joe Hockey recently indicated more superannuation changes may be afoot – especially for the ages we can access our super.
The Commission of Audit Report, released earlier this month, recommended that a five-year gap be maintained between the access age for superannuation and the Aged Pension so that it would ultimately settle at 65.
Treasury Secretary, Dr Martin Parkinson, seems to agree, noting in that the superannuation access age would most certainly have to rise: “Without putting any numbers on what the preservation age should be or when it should change, I think it’s inevitable that pressure will build for changes in that area” he said at a post-budget lunch.
A common concern with Australia’s superannuation system is that it allows someone to retire early, withdraw their super as a lump sum, spend it on housing, a new car, holidays, or other consumption, and then fall back on the aged pension.
It is a problem that would only be exacerbated if the pension access age is pushed-out to 70, but the superannuation access age remains the same.
Of course, early access to superannuation wouldn’t be such a problem if people were not also receiving such big concessions to invest into super. But they are, and this is costing the Budget tens-of-billions of dollars in income tax foregone.
Treasurer Joe Hockey has given the strongest signal yet that the government will be introducing sweeping reforms to bring superannuation into sync with age pension reforms that were announced in last week’s budget.
Responding to questions on ABC TV’s “Q&A” program on whether the government had any intentions to increase the age at which Australians could access their superannuation, Mr Hockey said the government will be announcing a major review of superannuation to make it fiscally sustainable.
But the Treasurer said any changes would “not [happen] in this parliament”.
However, he added that the government would have “more to say on retirement incomes policy further down the track. We are trying to give people a long lead time.”
So with possible changes flagged – is super the most reliable source of your retirement income? Who knows what other changes are possible or planned?
What’s your major concern about superannuation?
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Property Friends is a specialist Property Investment Strategist that provides solutions for people aspiring to financial independence, choices in retirement, or leaving a legacy. www.propertyfriends.com.au (03) 9758 5331