Speaking at the Committee for Sustainable Retirement Incomes (CSRI) inaugural leadership forum last night, Financial System Inquiry (FSI) chairman David Murray has called on the government to overhaul the retirement incomes framework.
The government was widely criticised when, last month, a comprehensive review of the retirement incomes system was ruled out. Mr Murray believes that a strong retirement system is critical for Australia considering our reliance on foreign capital to fund investment.
“The only sensible way to approach solving this intergenerational problem is to look at superannuation, pensions, housing, welfare, and the tax system all together,” said Mr Murray.
Mr Murray was also critical of the superannuation industry for focusing on reporting average performances figures above the industry mean, instead of focusing on tailoring their products to members’ needs.
“There is not enough initiative for funds to sequence risk depending on members’ age, which means some people are exposed to too much risk at the worst time in their life cycle,” said Mr Murray.
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The wash-up of the 2014/15 Federal Budget saw the Abbott Government’s popularity ratings plunge to a record low. It took four months of changes leading into the 2015/16 Budget to clean up the mess and set the party in a direction that removed all unpopular proposals.
Mr Murray is suggesting a complete review and overhaul of the current retirement incomes framework from the bottom up. As he said last night, this would require superannuation, pensions, housing, welfare, and the tax system to be reviewed all together. The words ‘tax review’ are exactly what this government is looking to avoid, with recent polls now suggesting Mr Abbott and the Coalition have clawed back popularity to be almost on par with the Labor Party on a two-party preferred basis.
Unfortunately, it’s sometimes the reviews that scare us the most which may have the biggest impact on the future of our country. It’s disappointing to see a government I voted into power sitting back playing the ‘safe game’ simply to push through to the next election with a chance of regaining power.
Change for the sake of change isn’t progress, but a review of the entire retirement incomes system, when considering the extremely valid points raised by Mr Murray, makes more than enough sense to me.
What do you think? Should a comprehensive review take place? Are superannuation funds offering products that suit the needs of their individual members’ age and stage?