What to expect from the RIR

After almost a year of analysis and deliberation, the federal government has been handed the final report from the Retirement Income Review.

Federal Treasurer Josh Frydenberg was handed the Retirement Income Review report on Friday.

The report, announced on 27 September 2019 and undertaken by an independent panel, chaired by Mr Mike Callaghan AM PSM, with Ms Carolyn Kay and Dr Deborah Ralston, examines the interaction between superannuation, the Age Pension and voluntary savings – including home ownership.

An initial consultation paper was released in November 2019, which highlighted how the current system favoured the wealthy, with Australia’s wealthiest given twice as much financial support as those on the lowest incomes.

Mr Frydenberg may be expected to level the retirement income playing field, at the same time as extracting whatever ‘budget benefits’ he can from a segment of the population that holds 50 per cent of the nation’s wealth.

So far, his office has declined to comment on when the report’s findings would be released.

Industry Super Australia (ISA) has called on the government to publish the findings immediately and has raised concerns that the review might be used as a “stalking horse” to go back on its plans to increase compulsory contributions.

“The community knows that government faces a tough task, but we can’t have this review remaining hidden or used as part of a secret plan for super to create an Australia where there are those that can have a dignified retirement and those that can’t,” said ISA chief executive Bernie Dean.

“Super is already a great economic leveller for most Australians, but we need to do more to avoid us ending up as a divided nation, with millions of women and low-income earners scraping by just on the Age Pension.”

ISA says eight million Australians would suffer if the government were to dispense with the scheduled rise in superannuation contributions made by employers.

“For an average 30-year-old couple working full time, cutting the super guarantee increase would deprive them of up to $200,000 in super by the time they retire.”

Shadow treasurer Jim Chalmers also wants the report released immediately.

“This government … when they look around and see the way people’s retirement incomes are being eroded, they think the answer is to go after super,” he said.

The review, which examined the current state of our retirement system, also analysed how it it is expected to perform as the population ages, taking into account any incentives for people to self-fund their retirement and the sustainability of the system in terms of the federal budget.

While the government had previously ruled out including the family home in the pension asset test and committed to increasing the compulsory superannuation guarantee from 9.5 to 12 per cent, since COVID-19, many predict these, and other plans, could be subject to change.

Actuaries and consulting firm Rice Warner believes the report will focus on the adequacy of the current rate of superannuation contributions, home ownership via superannuation, Age Pension eligibility criteria, allocation to longevity products, spending patterns and the vehicles for superannuation.

“We expect it will highlight areas of strengths and weaknesses. There will be much to ponder and no doubt more legislation to follow,” stated Rice Warner.

“Let us hope that politicians and the industry focus on the critical matters that will make our world-leading system even stronger.”

Taking into account the recent early release of super scheme and legislated changes to the super guarantee, Rice Warner noted: “When we add in Early Release Schemes [extended yesterday, at a budget cost of further $2.2 billion], it does suggest the current legislated rate of 12 per cent will be needed.”

The firm also said the review may give more freedom and help for those who want to manage their own money (SMSFs) and could float the idea of restricting the number of superannuation funds to the 10 best funds.

“The PC’s proposed ‘best in show’ was flawed and is unlikely to be introduced. Instead, market forces will reduce the number of funds and they will all be bigger and much stronger than the funds existing today,” said Rice Warner.

The Grattan Institute believes the focus will be on super tax breaks and SG contributions.

“If the review finds, as I expect it will, that most Australians can look forward to adequate retirement income, then the case of increasing SG certainly disappears … That’s certainly the finding of our work and that remains true if you include that returns are lower,” said Grattan Institute household finances program director Brendan Coates.

“I’d be surprised if the review’s findings point in a different direction.”

“An area we think the review will certainly look at is, superannuation tax breaks. We saw in the consultation paper, tax breaks are skewed towards high income earners which is arguably [at odds with] the purposes of super, particularly in a post-COVID world, with government accumulating substantial deficits.

“It is hard to see how super tax breaks that are inconsistent with the purpose of super could survive. You could use that money for budget repair and personal income tax cuts.”

The review itself was not to make any recommendations but Mr Frydenberg will no doubt be examining it to make some of his own.

The YourLifeChoices submission recommended the following:

  • Increase base rate of the full Age Pension to an amount that better aligns with the affordability of retirement.
  • Increase the rate of rental supplement to a more realistic amount for those under housing stress.
  • Reduce the penalty for earning income – so consider removing the income test attached to the Age Pension.
  • Encourage a higher mature adult workplace participation.
  • Consider capping the number of legislative changes to retirement income or to grandfather all legislative changes to support longer-term planning
  • Review the 2017 changes to the taper rate to encourage people to save and self-fund.
  • Review the role and efficacy of Centrelink as the delivery agency for the Age Pension.


Which of the points in our submission would you most like to see come to fruition? What do you think will be the hot-button issues to come from the Retirement Income Review? What do you most fear happening?

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