Up to $7 billion a year could be saved by increasing the super access age to 65.
The Productivity Commission has found that by increasing to 65 the age at which Australians can access their super, the Commonwealth budget could be better off by $7 billion a year. Detailed in the commission’s newest report, Superannuation Policy for Post-Retirement, the commission estimates that the change would encourage Australians to work an additional two years on average, reducing pressure on the Age Pension and Federal Budget.
The superannuation access age is already legislated to increase from 55 to 60 by 2025, but the Productivity Commission modelling is based on estimates if that age was raised from 60 to 65 between 2035 and 2043.
Budget savings of $7 billion a year would be expected from 2055 onwards with the Age Pension system saving $3 billion a year. Increased income tax receipts may rise by $5 billion, with welfare payments potentially increasing by $1 billion.
The commission’s report notes an “absence of clear and prioritised objectives” coming from Canberra and suggests that it is difficult to know how to design good policy without direction.
The implementation of compulsory superannuation in Australia may very well be the most important cornerstone of the Australian budget for years to come, but the future superannuation remains uncertain.
The current Abbott Government has continued to suggest that no changes will be made to the superannuation system in its first term, which makes one wonder, what is planned if the party is re-elected for a second term? As the Productivity Commission has suggested in its report, it’s very hard to design policy around the future of superannuation when direction isn’t currently being provided.
As detailed in the latest Intergenerational Report, by 2055 there is expected to be a massive spike in the average life expectancy of every Australian. The only way that Australians who are expected to live longer will be able to fund their later years is through the implementation of a successful superannuation system. We need a retirement income review.
What do you think? As the life expectancy age continues to rise, is it necessary to increase the age at which Australians can access their super? Should more government focus be put on the superannuation system considering its impact on future budgets?