Federal Government to assess superannuation, housing recommendations from Retirement Income Review

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Australians could be encouraged by the Federal Government to draw down on their superannuation balances and use equity in the family home to fund their retirement, rather than rely on increases in compulsory super contributions.

The Coalition is considering the findings of the wide-ranging Retirement Income Review, which was compiled by former senior Treasury Department official Michael Callaghan and covered the age pension, compulsory superannuation and voluntary savings.

The review was handed to the Federal Government in July and is set to be publicly released by Treasurer Josh Frydenberg on Friday.

It is likely to fuel suspicions the Liberal Party intends to defer the planned incremental increase in the super contribution from 9.5 per cent to 10 per cent due in July 2021. That rate is then set to increase to 12 per cent in 2027.

Limited excerpts of the review provided by the Government focus on the potential effect the compulsory super contribution increase could have on wages.

“The weight of evidence suggests the majority of increases in the [superannuation guarantee] come at the expense of growth in take-home wages,” the review states.

“If the superannuation guarantee stayed at 9.5 per cent rather than increasing to 12 per cent, [retirees] would also have higher incomes during their working life.”

The review also suggests that keeping the super guarantee at 9.5 per cent would increase incomes for most people across their working years by 2 per cent.

Housing could take on ‘even more important role’ in retirement income
The review finds the age pension provides a strong safety net and reduces income inequality, but notes the complexity of the superannuation system and low financial literacy means many retirees aren’t making the most of their assets.

It suggests an efficient way for Australians to enjoy a more comfortable retirement is by accessing the equity in their homes and drawing down on their superannuation balances.

“Home owners also have the opportunity to access the equity in their home to supplement retirement income and manage longevity risk, although few currently do so,” the review said.

“If this potential were realised, housing would take on an even more important role in the retirement income system.”

The report also identifies “a major misunderstanding” that sees retirees relying only on the return from their superannuation investments, rather than “drawing down those balances to fund living standards in retirement”.

The family home, which represents the largest share of net wealth for Australians aged 65 and over, is already regarded as important as it reduces accommodation costs in retirement.

But the corporate regulator ASIC has previously warned against “reverse mortgages” — where a loan is taken out using the family home as equity with no repayments made until the house is sold or the owner moves out or dies — because many borrowers had a poor understanding of the financial risks involved.

In a statement, Mr Frydenberg said the review made it clear Australia’s retirement income system is “effective and sustainable” and “will continue to deliver for Australians in their later years”.

“While the report doesn’t make recommendations, its key observations will play an important role in better informing future public policy and the retirement outcomes delivered to Australians,” Mr Frydenberg said.

“The report also reaffirms the need to simplify and enhance the efficiency of the superannuation system and lift home ownership rates as a driver of higher incomes in retirement.”

Speaking ahead of the release of the review, Labor’s Shadow Assistant Treasurer Stephen Jones said Mr Frydenberg needed to guarantee the scheduled increase in the super contribution to 10 per cent will happen.

“The Government has to stick to the promise that it made to the Australian people before the last election … this is a structural change to ensure Australians over multiple generations are set up with the right level of retirement savings,” Mr Jones said.

What do you think of the review so far?

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Total Comments: 25
  1. 0

    What do you think of the review so far?

    What the…………. nothing of any interest here………….. how about we wait till Friday to be absolutely AGHAST at what the Liberals will do…

    Maybe we will have to touch our toes….more than likely

  2. 0

    I am sick and tired hearing about using the family home to support retirees. Not all retirees have a family home and those that do should not have to help out the Government to support other retirees. Is this an extension of the taxpayer supporting Fox tel rather than supporting the ABC as we have seen this year? I have never heard a review into the Governments 15% subsidised retirement scheme, subsidised by the tax payer who they attempt to screw every opportunity. Let us retire and leave us alone to enjoy the rest of our lives.

  3. 0

    More Liberal party bull shit absolute rubbish.

  4. 0

    Couple of things, super is for the future and should not be allowed to be withdrawn unless severe hardship can be shown. The increase to 12% is legislated and can only be changed by a change to the legislation.

    • 0

      That’s common sense Horace. But doesn’t play the game of ‘all run round panicking before we know what first what is in the report and second what proposals the Government might make as a result’.

    • 0

      Agree that super is for the future and should not be allowed to be withdrawn. This should also include the successive governments that have raided the monies collected under legislation since 1907. That was just government withdrwing the super we’ve paid in the special aged pension tax. Oh yes, this is legislation that has never been withdrawn, just ignored so why wouldn’t we think the same political scum-bags won’t ignore the legislated 12% increase to the SG.

      Profits are down for the politician’s mates, so they’ll screw they worker harder, make the oldies pay for their own retirement and reneg on the OAP and let’s see, maybe introduce death duties for the poor and other nasty scams. Look at the way the governments are approving the creating of the slums of the future and pushing people out of their homes and into them so they can let their development mates make a fortune in property deals. Eventually they’ll condem these developments and push people out of them as well.

      Doesn’t matter if the property is toxic, government will by it at above market value and then spend 50X the purchase price cleaning it up. And along the way they’ll get amnesia and forget what they have agreed to, but not forget to get their slice of the pie.

      Maybe the first legislation we should ignore or cancel is the very generous super scheme and other hand-outs for politicians. Our political system stinks because there is no accountability. The legal system protects politicians and the wealthy. Maybe a big enough bunch of independents could stand and we can break the two party picnic which is only for the good of the few at the expense of all. Our politicians only follow legislation that suits them and have memory failure with everything else. They’re just lucky we’re not in a country that has coups or civilian uprisings. They’d all be out…

  5. 0

    This report doesn’t recommend reverse mortgages – it quotes an earlier ASIC report stating that reverse mortgages as a method of accessing home equity in old age has very real financial risks. No government that wants to stay in power is going to force old people to take financial risks on such a hard-earned security asset as their home. Overall I thought the report favoured the idea of getting more people to own their homes by age 65 in order to free up their rental/mortgage commitments. The day a government/aspiring political party interferes with the family home is the day their hopes of gaining power are dead and buried.

    • 0

      Oh you poor naive soul…this is the LIBERAL (FOR THE BOSSES) party…

      I read article today stated that with the rise in super, you wont get a wage rise any time soon….please oh please oh wise Liberal Party when was the last pay rise apart from the minimum wage from fair work.

    • 0

      Reverse mortgages are all about gambling on how long you’ll live.

  6. 0

    Stay away from my super you low life’s

    • 0

      Lets touch the Pollies Super…… I’m sure they will forgo some of their 15.4% that goes into there coffers….

      Oh no one rule for the them and us peasants will be happy in our lot.

      Please sir can I have some more.

      Not bloody likely.

    • 0

      Of course there is a rule for the politicians and the rich. When did you see a rich person or a politician on jury duty? Look at the way they can forget things and not be prosecuted, unlike Joe Public, who gets admonished for being forgetful and convicted.

  7. 0

    Well something will have to happen about the accumulation of wealth in family homes. Why would people in millionaire mansions draw the pension and then hand the property over to the next generation tax free? Let us get away from the exempt status of family homes in the future at least. You cannot do it to people who all their lives planned for that exempt status; but do something about it in the future. Treat property the same as other assets, whether you live in the place or not.
    Panos rabbiting on about the present Govt is nothing new and does not really help. People like him/her most probably have no worries since they might have very little to show and are really envious of people having investments. So the continuous attacks about politicians having pensions (only LNP ones but the other ones get the same). Yes, let’s go ahead and do some changes about our retirement in the future but it takes guts as too many people are rusted on the old system.

    • 0

      Maybe include the family home, but only when the pollies are subject to the same assets, and residency test and forgo their publicly funded “entitlements”.

    • 0

      And people rabbitting on about multi millionaires having homes and getting pensions need to stop listening to rhetoric as well.
      Just how many millionaires do you think Australian has?
      Not that many that it would make any marginal difference difference.
      However, we have a plethora of has been politicians, over paid bureaucrats and the like knee deep in the retirement money pile.
      Always Keep your eye on the squealer because that’s the one that’s protecting the biggest dung heap.

  8. 0

    The 2017 changes to the Pensioner Assets Test was stealing pensioners assets, no changes to the Parliamentary Contributory Superannuation Scheme while reverse mortgages are a good idea for the plebs.

    • 0

      You have to look at the parliamentary pension as a private pension fund, nothing to do with Centrelink. I suppose we could all have one of those if we paid for it, pollies get it with their job description and it’s part of their entitlements. Maybe Sooty you should have tried to get in among them. The 2017 changes were not warranted but then they did not hurt too many people further down the food chain; most of them did not get much in money but they copped the loss of the pension card which was then restored to them anyway.

  9. 0

    There would be plenty of money available for a decent age pension if the Australian obsession of leaving a lot of assets for the next generation could be addressed. Think about it – an estate over $2 million should have an inheritance tax before distribution to the next of kin. People would be more inclined to spend a bit more on themselves, loosening up the purse strings, win-win for the Govt and the pensioners. People with nothing will get more and the others with more than $2 mills won’t miss out because they are no longer with us. Sure – the offspring would be squealing “not fair”. Most places you pay inheritance tax why not here. If you are short of funds, that is where I would look. Not popular, I know; and I am not a socialist.

  10. 0

    Here we go again. No way family home should be used. Review Govt retirement scheme. Not home owners. Makes me mad and would most certainly effect my vote.



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