It’s time to shift Australia’s thinking about super

Policy needs to look beyond super to address retirement income issues.

Patricia Pascuzzo

The deal struck on the Federal Government’s superannuation package represents an important step towards ensuring greater fairness and fiscal sustainability. However, if Australians are to have adequate income in retirement, policy needs to look beyond the superannuation system and consider how all the components of the retirement income system work together.

Research shows that even under a mature superannuation system, most people won’t have saved enough to meet their aged-care costs and will have income well below a comfortable income in retirement. People on average full-time incomes will struggle to have a comfortable retirement unless they make voluntary contributions to superannuation.

Given the increasing cost of aged care and a rising rate of people going into aged care facilities, Australians will need to make more effective use of all household assets to maintain an adequate living standard.

Australian households have more wealth tied up in housing than any other asset. But pensioners need to be encouraged to access the equity in their homes to improve their retirement incomes. Currently, however, the reverse mortgage market in Australia fails to support retirement income - most loans are lump sums not income and the average loan size is small and costly in terms of interest.

It would be counter-productive to improving retirement income adequacy if any funds released in this way were included in the Age Pension means test. The value of the home is no different from any other asset, and in principle it should be included in the Age Pension means test. The difficulty, however, is how to access pensioners’ home equity without reducing their cash income, especially as some pensioners own high value homes but are income poor. 

Including the family home in the means test would further disadvantage women, who have significantly lower superannuation balances than men. Women live longer than men, and so are likely to rely more on housing to help fund aged care. Nearly 70 per cent of 65-year-old women will need to enter permanent aged care facilities at some stage. Women are also more likely to receive the family home in divorce settlements, while men tend to have more access to superannuation savings.

These and other issues will be addressed at the CSRI’s Leadership Forum in Canberra on 12-13 October. The forum will feature presentations by Financial Systems Inquiry Head David Murray, Financial Services Minister Kelly O’Dwyer and her opposition counterpart, Senator Katy Gallagher, alongside key industry, academic and community leaders.

Among the specific policy issues to be considered are:

  • Should the phased increase in the compulsory contribution rate to 12 per cent be accelerated?
  • How can we make more effective use of superannuation assets at retirement through income stream products?
  • Should we consider options to encourage older Australians to remain engaged in the labour market in those cases when they are able to continue in paid work?
  • How do we address the gap in superannuation between men and women?

To find out more about the CSRI’s Leadership Forum or to register, visit

Patricia Pascuzzo is the Managing Director and Founder of the Committee for Sustainable Retirement Incomes. 


    To make a comment, please register or login
    6th Oct 2016
    The Governments White Paper on the Retirement Income system sought public feedback on the proposed reform of Australia's retirement income system, which did not just focus on superannuation. Much time and effort was put into providing this feedback by many interested organisations and individuals, which the government chose to ignore. True and value change will not be achieved with political interference.
    6th Oct 2016
    Especially now we know the terms "fair' and "sustainable" actually mean we are going to steal your savings because we stuffed up and don't have a plan.
    6th Oct 2016
    Very difficult to appreciate the comments above when the author has not researched the subject matter.
    As a specialist in retirement income, the author should know that most reverse mortgages have income streams as a viable option
    6th Oct 2016
    Reverse mortgages actually have compounding work in reverse but superannuation actually fails the compounding test as far as I can see.

    Funny isn't it.

    If they could get compounding working for superannuation savings people wouldn't need reverse mortgages now would they?
    6th Oct 2016
    I am getting very tired of this claim women are disadvantaged by inequitable superannuation benefits . If women choose not to participate in the workforce as long as their male counterparts then of course the benefits are less ie less work years and contributions or non continuous work history . My wife had three children , my daughter 2 children and both have larger super benefits than myself over shorter working life There are still a few other things still wrong with the current super regulations that the $25,000 contribution cap that should be increased to $35,000 and indexed each year. The $1.6 million transfer account cap for each member should be increased to at least $4 million each member Compare the benefits of politicians and Top level public servants and academics in University super schemes who have more generous super schemes say $300,000 - $400,000 at least annual income streams on retirement and mostly funded by the State and Federal Governments that would need $10 million funding sources to generate this level of income streams at say 3% -4% return earnings The private schemes fund their own pensions from their own investments, personal savings over a life time and personal contributions . There is no need to increase the burden on employers by increasing their super contributions on behalf of employees to 12 % They simply cannot afford more than the current rate 9.5 %
    6th Oct 2016
    I agree Dan. Anything that encourages people to add to their super balance should be encouraged. e.g. raising the 1.6 million cap.
    Re the comment made in the article : "People on average full-time incomes will struggle to have a comfortable retirement unless they make voluntary contributions to superannuation." Of course!! That is why there is the provision to make non-concessional contributions! And people should be doing so throughout their working life. If they are low income earners then they will receive $500 LISC to boost their super.
    And reducing the non-concessional contributions to a lifetime limit of $500K is crazy. The gvt should be encouraging people to add as much to their super as possible.
    6th Oct 2016
    Dan, statistically your family is an an-nominally. Women who married in the 1960s,1970s or early where not excepted to work and they dedicated their life to their family with the expectation that their husband would provide for them. Some fathers thought it was a waste of time spending money on educating a girl child. If they did work it was often part time, secretarial or sales work. They didn't see the change to dual income families coming, nor did they see the devastating effect of divorce on their future. These are the women who are retiring now.
    If you were lucky enough to have a happy marriage with a private super fund none of this would bother you.
    The most likely group of people to be in poverty in their old age are the single females. Not all, just more than men.
    Old Geezer
    6th Oct 2016
    When super first came in a woman could get an exemption from contributing if her husband already did.
    6th Oct 2016
    In 2014 I left a permanent job and relocated to the Sunshine Coast, and other than a few short term temp jobs, I was unemployed. I completed a Cert 111 in Business Admin and a Tax course in the following 2 years and found a job as a Tax Consultant for the tax season in 2015. Having worked in accounts for over 40 years, I thought it would be easy to get another job. Haha! I have now moved back to the Brisbane area and when I applied for jobs with agents, I was told that employers don't want people who have been out of the workforce for a year. I don't suffer from Dementia, can still do the job, with more accuracy than many young people, but maybe not as fast, so please tell me where our age group will find jobs. The government are living in cuckoo land, if they think that older people will be employed up to the age of 67 or later. Of course they don't have to worry with their large pensions after leaving parliament and all their perks.
    6th Oct 2016
    as for David Murray he himself received overgenerous super benefits from the Commonwealth Bank before it was privatised , Minister Kelly O' Dwyer has no idea as shown up in the pre election conversation to changes on super , the academics have vested interests with generous university schemes , and if David Parkinson or any other fat cat public servant is on the forum then forget it it nothing will happen , their schemes are as inflated as the politiciansand will be a waste of time , aviation fuel and coffee and accommodation
    At least Katy Gallagher has some brains and will see thru the crap from the others
    Tony Abbott was right all along
    Do not change and meddle with the private super schemes have a close look into the pollies and public servant schemes
    6th Oct 2016
    Hi Dan

    I have just written to Katy Gallagher as I also think she may have some brains also. I have given her some thoughts that may be of value to her at the CSRI conference.

    Specifically about Pension Impacts 2017, Reverse Mortgages, The Pensioner Loans scheme, discussion points, options about the Family Home in the Assets Test.

    The people attending the CSRI conference are a broad overview of the types of people that MAY understand the issues involved with retirement incomes (except for KOD)

    Small Point- The Greens in supporting the Govt to get the Assets Test legislation passed last May were told that THEY would get a Retirement Incomes Review for agreeing- I wonder what happened?
    6th Oct 2016
    I hope Katy listens to you I think she maybe good value KOD hopeless
    6th Oct 2016
    Quote : "People on average full-time incomes will struggle to have a comfortable retirement unless they make voluntary contributions to superannuation."
    Well people should take responsibility for themselves & make the occasional voluntary contribution to their super.
    6th Oct 2016
    As we have been urged to do for years now.
    Not Senile Yet!
    6th Oct 2016
    If you want people to work rather than be just on a Pension.....the the Govt needs to LEAD BY EXAMPLE!
    I KNOW PUBLIC SERVANTS WHO ARE HAPPY TO reduce their hours from 60-70yrs of age from 40-50hrs to 20-25hrs and open up an opportunity for someone else to do the same!
    But they have been told...NO.....FULLTIME OR NOTHING!
    Leadership is about doing.....not just talking or changing retirement ages!
    Most would like to only do 2-3 days and gradually wind down......but the Government Bosses refuse this option!
    People need encouragement to stay working instead of Penalties for doing so!
    Partime and causal work earns higher penalties-loading that push 1-2days work into higher penalties in terms of loss of Pension.....the Penalty mentality needs to GO!
    Half the Penalty loss of Pension income would encourage more to work and thus SAVE the Government Millions by people being less dependant on their Pensions.
    As any tax increase is a bonus to counter lowering the Penalty-Loss of Pension....Win-Win for BOTH!
    PERHAPS EVEN REWARD THOSE WHO USE THEIR EXTRA INCOME BY HAVING A DISCOUNT IF THEY TAKE OUT PRIVATE HEALTH COVER.....By not applying Penalty loadings on Private Health Membership.....thus decreasing dependance on Medicare!
    This 2016.....and they need to modernise their Old Fashion Penalty System with a Reward System!
    6th Oct 2016
    How to you plan retirement when the rules keep changing, for example the new asset test starting Jan.2017.No change to our politicians super I see.
    Old Geezer
    6th Oct 2016
    Super is only a tax elective savings vehicle and should only form a part of your savings and retirement plans. If you put all your eggs in the one basket then if that basket rots your eggs you have little if anything left. So if you only have a part of your wealth in super then if those eggs rot you have all the others ones left that you can use.
    6th Oct 2016
    OG Many of us use 'Keepegg' to maximize protection of our super eggs. Stops them rotting. You should try it.
    Old Geezer
    6th Oct 2016
    Nope super can rot very quickly especially with the government eyeing it all off.
    6th Oct 2016
    No trust me. Kèepegg works without fail.
    Tell everyone.
    Old Geezer
    6th Oct 2016
    Good so you have had experience with Keepegg. Me too but never again as that all you can taste no matter what you do with them. Not too sure what smells the worse rotten eggs or Keepegg.

    6th Oct 2016
    Ho hum, another day, another story about superannuation. Surely there can't be any more to be said.
    6th Oct 2016
    :) Its like watching the tide at the beach. Same ocean - different direction every day.
    6th Oct 2016
    Ouch -reverse mortgage -no no no.
    6th Oct 2016
    Well I've Researched it myself, and to live in any sort of Decency nowadays, you have to be getting the Interest off 2 Million Dollars :-) :-) So Start Saving :-) :-)
    6th Oct 2016
    That is about right.
    6th Oct 2016
    Now that took me 10 minutes with a writing pad And I never had to go through 8 Expensive Government Department's, 5 Lawyers and the Treasurer to work it out !! :-) :-)
    6th Oct 2016
    Australian's always had adequate income in retirement in the past.

    It was fair and sustainable.

    Let's hope that group can work out where they went wrong to stuff up a perfectly good system .

    As for fairness and sustainability. It simply doesn't exist anymore. It is a fairy tale from a kinder and gentler time when we lived in a Society and not an Economy.
    Old Geezer
    6th Oct 2016
    As with nearly all things super was good until the experts got to it and turned it into something different than what is was designed to do.

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