Almost nine in 10 retirees (88 per cent) are dissatisfied with their Age Pension experience, according to new research.
The Retirement Reality: Advice and the Age Pension whitepaper reports that 83 per cent of those surveyed found the Age Pension complicated and 77 per cent were willing to pay up to $1000 for personalised advice.
An overwhelming number – 74 per cent of women and 67 per cent of men – say that support should be provided by their superannuation fund.
The data was collected by Link Group in partnership with Retirement Essentials. It aimed to assess the retirement needs of almost 1000 Australians aged 65 to 75 who had applied for the pension or were close to being eligible.
Maximising Centrelink entitlements and retirement income was the biggest concern for more than half of the respondents.
The second biggest concern was how to best manage superannuation in retirement.
“Retirees are clearly concerned about missing out and fear not being able to sustain themselves into old age,” the paper says. “Solutions should focus on ensuring specific assistance around entitlements, further strengthening our insights around funds providing Age Pension support.”
The combination of assets and income tests, thresholds that change every year in line with inflation and a fear of ‘getting it wrong’ and having to pay back amounts results in too many older Australians not receiving their full entitlements.
The push to allow older Australians to work more without having their Age Pension payments reduced is also ramping up pressure on the system.
National Seniors, the National Farmers Federation, the Council of Small Business Organisations of Australia and Independent MPs Rebekha Sharkie and Dai Le are leading the charge to change pension rules and allow retirees to work without penalty.
Some senior groups and economists, such as Matt Grudnoff from The Australia Institute, have long advocated a universal pension.
“At the heart of the problem is an Age Pension system that is both inadequate and hugely complex,” Mr Grudnoff wrote for YouLifeChoices.
“But there is a solution – a universal age pension.
“The main advantage of a universal age pension is that the whole system becomes simpler. It reduces the cost of administration to both the government and to retirees. No more having to work out if you’re eligible for a pension or part pension. No more asset or income tests.”
As one YourLifeChoices member put it: “New Zealand has a universal pension and pensioners can earn money but then put in tax returns like every other worker … It works like a dream.”
Since the federal government’s Retirement Income Covenant (RIC) took effect last month, superannuation funds are now obliged to provide more support and advice for members. Funds must offer strategies that better help retirees and not just those in the accumulation phase.
The Link Group research also highlights another challenge – the decline in the number of financial advisers whose ranks have dropped 30 per cent since 2018.
“We saw a mass exodus of advisers due to extensive regulatory changes. Not only have fewer new advisers joined the industry since, but the price of personal financial advice has risen substantially over the past two years,” the paper says. “As noted in ASIC Report 627,1 it is no surprise that consumers consider advice to be too expensive.”
Link Advice general manager Duncan McPherson says the challenges in navigating the Age Pension application process can cost retirees dearly, potentially decreasing their quality of life going into retirement.
“What is positive is that seven out of 10 retirees want their super fund to provide more retirement and Age Pension support,” he says in the Financial Standard.
Retirement Essentials director Jeremy Duffield said that with a long retirement horizon and no backpay on the Age Pension, retirees could not afford to miss out on benefits.
“That’s why we think it’s so important for super funds to offer help and education about the Age Pension while keeping member needs front of mind,” Mr Duffield said.
What is your opinion on the Age Pension application process? Would you like it to be simplified? Should super funds be able to offer you free support and advice about the Age Pension? Why not share your thoughts in the comments section below?
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