Not such a super idea

You’ve heard that we’re living longer? Or that we need more money in the super stash to enjoy a comfortable lifestyle? So does the periodic debate about lifting the superannuation preservation age get under your skin? A review by a superannuation law expert offers some ammunition.

Currently, Australians are able to access their super as early as 55 for anyone born before 1 July 1960, progressively extending to 60 for those born on or after 1 July 1964.

Would the economy benefit from keeping older Australians in the workforce for longer as a result of raising the super access age?

The short answer is “unlikely”, according to Deakin Law School superannuation law expert Dr Rami Hanegbi.

He says lifting the super access age was not likely to return economic or social benefits. In fact, he believes it would have a negative effect.

Dr Hanegbi, who researches tax and superannuation law and policy at the Melbourne-based university, recently reviewed the pros and cons of raising the access age.

In his findings, he says: “Laws that raise the access age to above 60, and have the effect of leaving many workers in a position where they have no viable choice but to continue to work, are a policy change likely to have significant consequences.

“For example, there are those who are constrained from working longer due to the physically demanding nature of their work – such as bricklayers.

“However, even those working in industries not requiring large amounts of physical exertion will, in many cases, be disadvantaged from such a policy move.

“While this course could bring some economic benefits, these are likely to be limited. This will be the case whether future labour markets are tight or slack, though in the latter case the benefits will be even more limited.”

Dr Hanegbi says that it is almost certain that a lift in the super access age rules would substantially negatively impact many people.

“Specifically, while it is true that life expectancies have risen, the rise in ‘healthy life years’ has been materially less dramatic,” he says.

“As a result, raising the superannuation access age from say 60 to 65 would dramatically reduce the percentage of one’s life spent in the ‘golden years of retirement’ where one is both retired and in good health.

“The negative impacts of such a policy on people’s right to self-determination, as well as on widespread confidence in the superannuation system, are also important consequences on legislating such a policy.”

Dr Hanegbi says policies that would have a marked effect on people’s lives should be based on solid evidence showing they were “welfare-enhancing”.

“Such evidence appears to be lacking in the case of raising the superannuation access age,” he says.

“Compulsory superannuation has been a part of the retirement landscape in Australia for more than 20 years, with the availability of retirement funds having a marked affect not only on taxpayers but also on their families and other members of the community.

“The consequences of making changes, therefore, need to be carefully considered.”

Dr Hanegbi’s paper, Should the Superannuation Access Age Be Raised?, was published in the journal, Australian Tax Reform.

Are you concerned about the possibility of having to work longer before being able to access your super?

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Written by Janelle Ward

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