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retiring early? « Previous | |Next »
March 15, 2010

Retirement and superannuation are pressing political realities for many Australians, with pensioners doing it tough. As Jennifer Hewett reminds us in The great superannuation delusion in The Australian the vast majority of Australians are going to retire on less money than they can live on. She says:

For most individuals, their superannuation simply won't be enough, particularly for all those baby boomers closing in on the end of their working lives. All the dire warnings about this haven't changed a result that is about to become obvious.Forget all those images of relaxed, sprightly grey-haired couples strolling around shops and golf courses and cruise ships, figuring out how to enjoy their tax-free, carefree money. To sustain even a modest lifestyle, about 80 per cent of people over 65 are still reliant on a part or full aged pension to supplement their super savings, and that percentage is not expected to drop much during the next several decades.

Te the 9 per cent compulsory contribution rate introduced by the Hawke/Keating government to help reduce reliance on the pension needs to be lifted to around 15%. Will the Rudd Government make reform moves in this direction?

It doesn't form part of the debate in the theatre of question time in Parliament, and is on the policy fringe of the various tax reviews that lie in the background.

| Posted by Gary Sauer-Thompson at 12:35 PM | | Comments (5)
Comments

Comments

There are lots of grey nomands around these days. They appear to be having a good time in their retirement.

"Will the Rudd Government make reform moves in this direction?"

Hope not. I would prefer to see the government squirrel away money to pay for decent pensions rather like the Future Fund arrangement.

With the hope that the administrators of such funds would not be as greedy or careless as a lot in the present super industry.

joe2
Superannuation Minister Chris Bowen has made it clear that the government's priority is to increase superannuation savings and government assistance for lower income earners,rather than those higher up the pay scales.

However, there is little indication that the Rudd Government believes that raising the current compulsory 9 per cent figure is a matter of urgency. We are to wait for them to release the Henry tax report.

Paul Keating, the architect of compulsory superannuation in Australia spoke to Fran Kelly on ABC National Breakfast at about 8:15 Tuesday March 16th. Listen to the podcast - it was sterling stuff.

He was critical of
1. Howard for backing out the legislation to raise compulsory super to 15%
2. Rudd for reducing additional super contributions to $25,000
3. governments that tinker with super
4. treasurers who listen to Treasury - tell Treasury what you want
5. Chris Bowen, Minister for Super for concentrating on workers earning $30,000 ie half the average wage - they should be on an Aged Pension.
6. Treasurers who worry about super schemes for workers on twice the average wage - the well off can look after themselves
7. treasurers who don't design a super system for the majority of workers ie those earning the average wage, 75% of average wage or 125% of average wage
8. Costello for changing the assets test such that people with upto $800,000 in assets excluding the family home can draw a partial aged pension, its created a small core of wealthy pensioners living in multi million dollar residences getting a health care card and subsidised utilities and car registration

Keating said that people need a pension that is 70% of their working income, the current Australian super funds pensions of 40% of pre retirement income

Keating said that Australia has amassed the 4th largest pool of superannuation savings in the world and we aren't using it properly

Personally I would like to see a default super fund that Alan Kohler called Kanga Supa for workers to contribute to.
As an older worker looking for work I have been unable to get a permanent job, I can get a cocktail of part time jobs, each of these jobs has its own super fund contributions. As casual employers will tell you the notion of super choice is farcical the reality is that if you don't sign up for the employers fund you don't get hired. I would like to see the government honour its election promise to introduce a superannuation clearing house with employees super contributions collected at the same time as PAYG tax and forwarded via the ATO to the employees fund of choice.

I notice many single women over 50 have part time jobs that provide that extra $200 a week to pay for groceries and petrol. Almost all these women expect that their pensions or super will expire before they do. The extra income is from jobs, sessional teaching, boarders, babysitting etc

These women can't get full time jobs even if they wanted them