Hidden behind the budget news is the recommendation, apparently in the finally released Harmer Review and also the Henry review, to increase the age (from 55 to 67) at which super can be accessed. What will this mean?
The Harmer Review into pensions and retirement income was conducted in 2008, as was the Henry Review into taxation. It would appear that both support the need to increase the age at which Australians can access their super, the preservation age.
The Australian Financial Review (15.05.09) quotes Treasury secretary, Ken Henry, as saying:
“The gap between the superannuation preservation age and the age pension age means that individuals can use their superannuation savings before they reach the pension age, such that, on average, approximately a third of superannuation savings are being drawn down before the age of 65”
The theory of raising the preservation age to that of the pension age (now to be 67) would achieve many goals; increase older workforce participation, reduce the need to fund Age Pensions (and thus the tax burden on younger workers) and reduce the likelihood of people outliving their savings.
This all makes good sense, but it is a mighty leap from 55 years of age to 67 and not everyone retires because they “feel like it” – many are forced into retirement by redundancy and the need to care for family members. There will need to be many more inducements to save much harder before we deny people access to their own money until they are much much older.