Commenting on its submission to the Retirement Income Review, FSC chief executive Sally Loane said this needs to be implemented as a matter of urgency by making sure people can default once and carry their fund from job to job like they do with their bank account or tax file number.
“The focus now needs to be on how to improve the system, make it more efficient and effective, and end the scourge of multiple funds created by our inefficient default system,” Ms Loane said.
Other key policy areas highlighted by the FSC in its submission to the government’s Retirement Income Review include:
- The need for a clear, agreed objective of superannuation to underpin policy decisions.
- The importance of key reforms to improve the system and deliver improved consumer outcomes, including the introduction of a “default once” framework and a retirement incomes covenant to support good retirement outcomes.
- An increase of the superannuation guarantee from 9.5 per cent to 12 per cent by demonstrating that many Australians will have inadequate retirement incomes without the increase.
- Demonstrating that the current taxation settings for superannuation are broadly fair for Australians regardless of their income level.
- Showing that superannuation reduces the economic burden of the Age Pension, but means testing is arguably too strict in its application.
In addition, the FSC noted that it has provided the review with data showing that Australia’s three-tiered retirement system is well targeted at boosting retirement incomes at the low-income end, while providing moderate, though not excessive, tax incentives across all income ranges.
Ms Loane said compulsory super was a sound and valuable public policy and it was delivering better retirement outcomes to all Australians.
“In comparison to other countries, the Australian aged pension is highly targeted, producing a fair and stable system,” she said.
“The Australian superannuation tax system provides roughly equivalent tax benefits to low, middle and higher-income earners. In other words, the system is fair for the community as a whole.”
