10th Jun 2015
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Making retirement sustainable
Author: Kaye Fallick
Making retirement sustainable

Planning or organising retirement income has become the ultimate juggling act in recent years, with far too many piecemeal, ad hoc changes to policy and entitlements. So imagine this: What if a group of experienced academics, senior policy makers, and community and industry organisations were to join forces to investigate a comprehensive review of Australia’s retirement income system? And ask the critical questions:

  • What is its aim?
  • Who benefits from this system?
  • How might it work better?

Well, you don’t need to pinch yourself, it’s actually happening!

YourLifeChoices was privileged to attend Day One of the inaugural Committee for Sustainable Retirement Incomes (CSRI) leadership forum in Canberra last week.  The committee is formidable, with former Federal Government secretaries Dr Michael Keating, Dr Vince Fitzgerald, Professor Andrew Podger, and Founder, Ms Patricia Pascuzzo.

Keynote speaker Cassandra Goldie, CEO of the Australian Council of Social Services (ACOSS), set the scene for a lively debate by noting the heavy political focus on the spending side of retirement incomes, but little will to change the tax concessions on super – the majority of which benefit high earners.

As Ms Goldie noted, our retiree income system has many strengths but fails on three key indicators:

  • clear purpose and cohesiveness 
  • the equality test
  • sustainability.

Presentations and a panel session, featuring members of the CSRI, further built on Ms Goldie’s observations on how our retirement income system could be improved. And, at dinner, David Murray, chair of the Financial Services Inquiry (FSI) addressed how we might improve our superannuation system.

Mr Murray noted that much of the day’s discussion had considered how a range of Comprehensive Income Products for Retirement (CIPR) might be developed to meet the need of today’s and tomorrow’s retirees.

It is fair to say that for the past two decades, the main concentration on retirement incomes has been on the accumulation or savings phase, with little attention on how retirees can draw down their savings in an orderly and sustainable manner.

Mr Murray’s FSI report emphasised the need for a CIPR that would enable retirees to meet their longevity needs, spreading their withdrawal of funds from super accounts throughout their retirement, avoiding the early withdrawal of too large a lump sum and a life lived in fear of running out of money.

Such products are, of course, difficult to create, as they involve risk management of pooled funds in order to guarantee secure returns for individual investors. Yet, until long-term retirement income stream products are more widely available, it is likely that retirees will continue to overspend or underspend their hard-earned savings.

An ageing population means that retirement income adequacy remains a hot topic, subject to blasts of hot air from politicians keen to seize the day – or even the moment – for their own political advantage. But such knee jerk reactions are rarely advantageous for retirees.

At last, the initiative has been taken by people who have the runs on the board when it comes to making effective policy change. We look forward to supporting the aims of the CSRI for poverty alleviation and income maintenance on behalf of all Australian retirees.

Read more at CSRI





    COMMENTS

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    worker
    10th Jun 2015
    10:15am
    Become a MP of parliament and receive a good pay whiles employed by the Australian citizens and after removed or leaving parliament as a MP (employee of the Australia citizens)continue to receive life time forms of pensions ,travel and other perks and of course you will not have to worry about the age pension or if you can get you first home or continue to keep your existing home.
    maelcolium
    10th Jun 2015
    11:46am
    Yes. MP's are paid from the earnings of the future fund where they deposit their meagre contributions and earn whopping benefits in retirement. This is a government fund and is clearly sustainable, so why are we left to fend for ourselves in the private superannuation industry? It's time the question was put.
    DC
    10th Jun 2015
    10:45am
    Unless the Politicians benefits, at whatever administration level are included in any considerations, nothing discussed can possibly be fair and reasonable to the average citizen!!!!
    greygeek
    10th Jun 2015
    11:10am
    I am in total agreement with "worker" and DC!! The time is long past, for a complete overhaul of retired PM's, MP's, financial packages! No longer should the taxpayer have to fund free air travel, an office, secretary, etc. plus an enormous income. If those packages were trimmed back think of the savings!!
    Now there is to be a group CSRI to tell us how to spend any money we may have or get! We have been following orders since we were born!! Save money, save money, remember most of us are of the pre credit card era, no $1 down, $1 a week loan packages, we had layby or a bank loan/hire purchase (if a female was over 21, or with a guarantor below that age)!
    This Committee would be best served addressing the opulent lifestyles of the aforementioned group of people, before telling retirees what to do!
    Manzac
    10th Jun 2015
    11:30am
    How much do I agree with the other comments. Having been retired for 4 years, and as a teacher not earning mega bucks but salary sacrificed and saved for our retirement, I do believe the polies need to get in touch with the coal face. There needs to be a policy put in place that stays there - not changed after the horse(retiree) has past the post.
    Fredklaus
    10th Jun 2015
    11:38am
    spot on
    andromeda143
    10th Jun 2015
    12:04pm
    This is a farce. The people discussing retirement incomes are not the ones who have to live on them. ACOSS is only interested in bringing everybody to the same level, no matter how low that is. When we get serious about helping older people live on the measly incomes we have to scrape by on it will be too late for half the population living as retirees today. Retirees themselves are the ones who should be consulted, not these 40 year old career politicians and public commentators who learn everything from books.
    Adrianus
    10th Jun 2015
    2:08pm
    andromeda143 you have very succinctly and accurately described the speed bumps to a successful outcome for retirees. Kaye has also stated clearly the problem in her first sentence, but I didn't read past the next few words..... "So imagine this: What if a group of experienced academics...."
    peedee
    11th Jun 2015
    12:59pm
    spot on andromeda. Any panel on retirees spending needs to get rid of Golding as she is hell bent on getting those that saved for themselves on giving it back. I think it is time to take money out of super and re invest it elsewhere before Golding and her lot freeze it for the benefit of others.
    KSS
    10th Jun 2015
    2:19pm
    Once again contributors are pollie bashing over their pension scheme as if by curtailing that and that alone would solve all other pensioners problems. Well it wouldn't! Stop being so jealous of those who are fortunate enough to have a good pension scheme. There are other sectors that also have very nice schemes in place and good luck to them I say. Also good luck to those who are able to save for their retirement - and this is mostly through sacrificing now for the future. Whatever they amass is good for them and the rest of the population. Stop complaining that 'not everyone has a good job, a house, , well behaved kids, foreign holidays, or can save' or "I am a woman, disabled, injured at work," or anything else. It seems to me that many here, and on some of these Government think tanks/advisory groups/expert panels and even this new CSRI are fixated in bringing everyone down to the lowest common denominator and seizing the rest through taxation effectively punishing those who have been fortunate in life and those who have planned for their future. Why? This site over the last few weeks/months has shown that it is not the very wealthy who scrimp and save but ordinary working people in ordinary jobs with ordinary wages who have amassed around the million dollar super accounts.

    Be happy for others good fortune why can't you. I am sick of hearing about how hard you think you have it. Try living in a country with no pensions at all, no healthcare, no subsidies, no Government housing, and no other welfare and see how you would fare. It seems to me that people are so green eyed over what they think others may have that they don't, that all reason goes out the window. And up goes the cry; "What about me?"

    I do agree with one thing though. Beyond the pension they get, politicians should not receive anything else from the public purse to fund their lifestyle including their working life after politics. That means they pay for their own offices, staff, travel, stationery, equipment and so on. They are well compensated in retirement, most go on the speaker trail or Directorships continuing to earn a salary. Good luck to them. But then they should pay for their own expenses, NOT the taxpayer.

    Now go for your life! As no doubt some of you will.
    greygeek
    10th Jun 2015
    3:57pm
    Not "pollie bashing" at all KSS!! Stating the bleeding obvious! The retired from Parliament People, can go and work in the private sector, and still be entitled to all the trappings of their previous time in Parliament. To me, that is double dipping at Taxpayer's expense. No other Private Employer would provide ongoing "benefits" once employment ceased, nor would the job description offer such a "exit package"!!! Go back to Federation, the benefits were raised then to "reward" those men who gave up their good jobs/careers to enter Parliament and at a time when the life expectancy was not much past 60.!!
    The scheme has been blown out of proportion now, given the longevity of man and woman and the endless opportunities for retired parliamentarians to take up positions in the private sector.
    We "Baby Boomers Generation" had no say in when we came into this World. The greater majority have worked diligently all their life, paid taxes, not been a burden to taxpayer's, did not receive handouts for babies, insulation, child care, etc. etc. and did not "whinge" about it! We just got on with our work! The comments here so far, do not smack of "green eyed people" crying out "what about me?"!! That is not befitting of our generation! However, I for one, believe in equality, and at present the system is inequal!! I am not for one minute suggesting that Australians become Communistic in relation to wealth etc.! I believe if I have worked hard, paid taxes all my working life, then I am entitled to monetary recognition from the Government of the Country! I also sacrificed to provide for my retirement and appreciate the small recompense I receive. The current system should not be seen to be a "them and us" situation. There also is no need for another blinkin committee to be established at taxpayer's expense to tell the oldies how to spend their retirement income!
    MICK
    10th Jun 2015
    5:02pm
    KSS: personally I have no issues with people who work hard, save hard and do well. My concerns are around a system set up to disproportionately advantage the rich and superannuation in this country is little more than a tax shelter for wealthy Australians.
    Whilst all AUstralians can access this tax shelter average Australians are forced to spend most of what they earn on SURVIVAL...the day to day living costs. Those on high incomes can pay these costs and then have significant amounts of money left over. So what they do is put much of this into the superannuation. The result is that they do not pay the top marginal rate of around 49 cents in the dollar. They pay only 15 cents in the dollar. And then the earnings of the fund are only taxed at 15 cents in the dollar as well, which continues to avoid the taxation.
    So please tell me about doing well KSS. Maybe stop tilting the playing field so that the well to do keep getting their freebies and the rest of the nation pays. This is what is wrong. INEQUITY!
    OnlyGenuineRainey
    10th Jun 2015
    5:29pm
    I agree Mick. The pollies deserve to be bashed. They are cheating hard working, frugal, careful planning Australians out of their fair and just rewards for a lifetime of paying taxes, while continuing obscene and indecent benefits to the rich.

    How dare they claim the aged pension isn't affordable and start tampering with the means test when 475 retired Australians are getting $2.5 million a year TAX FREE. It's disgusting! How dare they tamper with pensions when $30 billion is being allocated to superannuation tax concessions and 80% of that benefits the richest 20%? That's a disgrace.

    Nobody wants to deny the rich their just desserts. But EVERYONE should pay their share to improve the budget situation, and those with the most should pay the most. That's just common sense and common decency. But no, this disgusting Government would rather victimize people who have worked hard and saved hard but couldn't accumulate enough to be self-sufficient - and leave the wealthy to wallow with the snouts deeper and deeper in the trough.
    Adrianus
    10th Jun 2015
    9:15pm
    KSS it makes them feel clever to bash politicians. You are absolutely right about most posters on here. They claim to be half full and yet their attitude is definitely half empty. It must eat away at them that others have a better standard of living than they do. I know the two above are probably paid to trot out their anti government propaganda but really, its a bit rich!
    OnlyGenuineRainey
    11th Jun 2015
    3:42pm
    Frank, I don't give a damn that others have a better standard of living than I do. I am certainly not paid to trot any anti-government propaganda, and my glass is well over half full. But like many in our community I'm sick of supporting greedy blood-sucking leeches. It has nothing to do with anyone else having a better standard of living, but everything to do with disgusting vile creatures not being willing to pay for the benefits they claim, but exploiting and thieving from the hard working Australians who EARN the rewards the rich are claiming entitlement to. And it has everything to do with a government that is in the pockets of the privileged and doesn't give a damn for the nation or its people as a whole. Nobody with a brain and integrity could possibly defend the way this government is behaving, and nobody with a brain and integrity would make the ridiculously misguided remarks you make above.

    BTW. Your statement about posters being paid is a massive ASS-U-ME. (An assumption that makes you a major ASS!)

    10th Jun 2015
    2:33pm
    "Get a good job that pays good money" so you can buy a house (and a few cigars) before retirement.
    MICK
    10th Jun 2015
    5:04pm
    And how many "good jobs" does Commandant Joe suggest there are in Australia? Better he kept his arrogant mouth shut rather than attacked average Australians for wanting a fairer system and to be taken off the target list.
    Adrianus
    10th Jun 2015
    9:18pm
    mick why cant you be more positive? You never know what you may be able to achieve?
    MICK
    10th Jun 2015
    4:50pm
    Goldie has hit the nail on the head, but this government will ignore the issue of SUPERANNUATION TAX SHELTERS set up to benefit the rich at the expense of average Australians. But then who does this government represent? Certainly not middle Australia and those struggling to survive.
    peedee
    11th Jun 2015
    2:07pm
    I agree with chasing the tax shelters Mick but Goldie hit the middle guys and the feds let the big guys off..
    The middle guys such as myself benefited from 3 unbelievable years of super fund returns of around 12/15% which saw assets rise out of proportion. I define the middle guys as those with around 500k to 800k in savings. The short memories have already forgotten the wipeout of 2008 which will no doubt come again. So us middle guys who remember 2008 do not go and spend our good fortune ( assets built up in super) but use it as a hedge for when things go bad. 50% of my super was put in after tax from bank savings outside the super system and they are talking of putting a limit as on how much I can take out lump sum. My wife and I had ordinary jobs in the trades but saved hard to look after ourselves and consider ourselves very lucky to have been able to do that. I wish they would all just go away and leave us and our savings alone.
    OnlyGenuineRainey
    12th Jun 2015
    8:16am
    Peedee, I agree that the Government is hitting the middle guys, and it's wrong. But surely taxing an income moderately above a certain generous level isn't nearly as damaging as attacking someone just for having $500K (or $825K for a couple) in savings, regardless of their income. Morrison's proposal was dreadful, because it says that no matter what your current income, you will be punished for having saved in the past. Lower income earners will have to drain their savings to live, and then they will qualify for the pension again. That's STUPID!

    The Labor Party and Greens favor a small tax on those earnings that exceed $75,000 a year (for singles). Given that a couple can probably live quite well on $60,000 a year, I see no reason why someone with an income at that level should object to paying the tax.

    It's attacking people just for having saved - regardless of their current means - that I object to strenuously.
    Alsy
    10th Jun 2015
    5:51pm
    Is there an independent audit available to all taxpayers showing the Future Fund position each year and the drawdowns and balances since commencement and the future projected claims. Is there any surplus that could be used to bolster the contributions by the Government to increase the pensions of non public servants.
    MICK
    10th Jun 2015
    6:11pm
    Do you think that any government would HONESTLY open the books? Secrecy is more likely.
    DC
    10th Jun 2015
    5:57pm
    Totally agree with Greygeek and others on the same vane. Unfortunately some "friends" here are once again just happy to blast away at 'this' government. Why? Most of the comments made here until then were all going nicely and within reason?!
    It does not matter whether it is 'this' Gov - they are ALL happy to have the benefits etc !! That alone is the issue of discussion.
    MICK
    10th Jun 2015
    6:12pm
    I'd love to see Ted Mack make a comeback. But then Mack was reviled by all sides of politics because he exposed the entitlement rorts of those we elect to do OUR business.
    peedee
    11th Jun 2015
    1:49pm
    I just had a look at the makeup of the sustainable incomes board. If the system is in such a mess why are the people who maintained positions of authority that led to the current situation running a review. Talk about foxes in charge of the chicken shed. Where are the people who know what is going on, those people who have lived, worked and saved, or not saved as the case may be, who live everyday within the system. They are the experts who have succeeded and some have failed but they are the ones that know. The board is made up of " public policy thought leaders, with extensive experience in savings, superannuation, retirement incomes, taxation and budget issues"
    Same old same old with a bit of fancy window dresssing. Bit of a sick joke I reckon.
    Not Senile Yet!
    12th Jun 2015
    11:23pm
    KSS & Frank.....you know that the Super entitlements with regard to the ability to access tax subsidies are unbalanced and in favour of those who can afford to squirrel more away and therefore pay less tax! You know it.....but wish to name call anyone who calls for reform as Whingers or Jealous Lefties!!! Then you change the subject away from the Obvious....... that these tax avoidance schemes...whether they are Super or not.....are NOT Fair!!!!
    You refuse to address the issue......they are NOT balanced evenly and the Tax Payer is subsidising only those who can afford to stash their cash into them!!!!
    STOP Bashing and Name Calling......and own up to the facts!!!!
    The Whole of Super including MP's & SMF's need a complete revamp......NOT to Punish those who save......but to reward ALL who do!!!!
    BOTH Parties need to stop taxing any Super on the Way out and stop taxing the earnings whilst in Super!!!!
    But they both need to remove any tax subsidies altogether in exchange for that move!!!!
    Further to that ALL Super ....including MP's and SMF's need to adhere to the SAME Rules for everyone!!!!
    If no access is to be granted until retirement unless medically approved......then it needs to be the same rules for everyone!!!
    Salary Sacrifice with regard to Super....(which is a tax dodge).....should be removed for ALL.....except where one is employed by a Not For Profit Charity!!!!
    So sick of the Far Right Wing Victorian Policy of the Liberals and that includes KSS & Frank and others.
    Just because someone disagrees....doe neither make them a Whinger or a Lefty!!!
    Take the Criticism of your Policies as they are presented......simply unfair & benefitting only those who simply do not need it!!!!
    OnlyGenuineRainey
    13th Jun 2015
    8:57am
    I think the Government is misleading us all about sustainability of pensions. They are just telling untruths to justify attacking pensions and taxing super. Think about it:

    In the past, there were no means tests on pensions, and when they were introduced, they were much more generous.
    In past generations, married women didn't work. A taxpaying male supported his wife and potentially two aged couples - his parents and his wife's.
    In past generations, women who did work earned a pittance, and so did young folk.
    In the past, superannuation was limited to government employees and even they didn't get much unless they were very high up the chain.
    Our population is growing, not shrinking - mostly through immigration. The Government generally limits immigration to those who can and are likely to earn a living and pay tax, so logically the number of taxpayers should be increasing.
    Two to three decades from now, nearly every retiring full-time worker will have at least $500,000 in super - and couples will typically have $1 million.
    Given these facts, how has retirement funding suddenly become a problem? Oh, because we have nearly 1 million would-be-taxpayers unemployed, perhaps? Then the problem ISN'T funding retirement incomes, is it? The problem is that the Government can't manage the economy to provide jobs.
    Clive Palmer says the answer is to INCREASE PENSIONS SUBSTANTIALLY, thus giving the spenders more to spend, and so stimulating demand which creates employment. Just maybe he's onto something?
    mangomick
    15th Jun 2015
    6:15pm
    I'm a goats whisker away from retirement and thanks CSRI and ACOSS but I'll be o.k in figuring out how to spend my retirement income and how to go about making it stretch. I don't need or want your help in dreaming up ways in denying me access to all of my funds, thank you very much.


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