Grattan Institute CEO John Daley says there are better ways to provide adequate retirement funding for low-income earners – and super top ups is not one of them.
Mr Daley believes that providing super top ups for low-income earners would be too costly and too hard to target those most in need. He also feels that fees charged by super funds would negate any benefits of an annual super top up.
The Grattan Institute CEO suggests that while a targeted boost to the Age Pension would be far more beneficial in ensuring an adequate retirement for all Australians, there may be an even more effective way to improve the incomes of those most in need.
It’s common knowledge that retirees who don’t own their homes are most at risk of living a poor retirement. Many will even live below the poverty line. Mr Daley believes that a $500 annual boost in rent assistance for eligible older Australians, which would cost the Government around $200 million per year, would be the most efficient way to boost the retirement incomes of low-income earners.
On the other hand, a $500 increase to the Age Pension would cost the Government around $1.3 billion and half of that would be going to pensioners with a net worth of more than $500,000 who own their own homes that are exempt from the Age Pension means tests.
While Mr Daley’s suggestions may not be popular for many Australians, it would be interesting to see what you think of them. Why not let us know in the comments below?
Read more at The Grattan Institute website