In a blog post on the institute’s website, ICAA head of superannuation Liz Westover explained that the federal government’s announcement to lift the aged pension access to 70 has resulted in much discussion of whether the retirement income system is actually sustainable.
“The government may be right in lifting the access age but perhaps the more pressing issue is to clearly define what we want and need from our retirement system now and well into the future,” Ms Westover said.
“We are a long way off having a fully mature superannuation system in which people have spent their entire working life with 12 per cent super guarantee,” she said.
Ms Westover said that the sustainability of the system “is a major issue” and that people’s expectations along with the role of the aged pension have changed.
“The burden on the public purse to support a growing number of retirees is becoming unsustainable,” she said.
“It’s definitely time to debate all the issues and to ensure that the government recognises the political imperative to take action.”
I have for a long time advised clients that they require much more than the amount promulgated by actuaries and other advisers. The present concessional contribution caps are insufficient for many to accumulate an adequate retirement pension. When a person can afford to contribute large amounts to super that person is often around 50 years old. A concessional contribution of $35,000 is completely inadequate to build a nest egg. The retiree must make non concessional contributions to achieve a significant retirement amount. I wonder if the government’s experts are aware of this.