The 2015 Budget decision to tighten access to the age pension will potentially leave millions of Australians on middle incomes worse off unless there is an increase in the superannuation guarantee, lobby groups have argued.
According to Industry Super Australia, in the absence of an accelerated increase in the superannuation guarantee, a 45 to 50-year-old couple on average earnings could be an estimated $6,000 per year worse off in retirement as a result of the changes to the pensions assets test.
Similarly, the Association of Superannuation Funds of Australia (ASFA) said changes to age pension eligibility highlight the importance of saving more super to ensure the adequacy of their retirement income.
"Faced with growing public debt, governments need to make tough decisions about how they will support the next generation of retirees to fund their post-work years,” said ASFA chief executive Pauline Vamos.
"Under the current age pension assets test framework, ASFA estimates that a couple would need a joint superannuation balance of around $510,000 to achieve a comfortable retirement,” she added.
"Increasing the taper rate for part-pensioners from $1.50 to $3.00 per $1,000 of assets, while also increasing the threshold at which the asset test starts to apply, would require a couple to save around $120,000 more for a comfortable retirement, requiring a super balance of $630,000.
"This assumes they drawdown entirely on their capital, and receive a part-pension as their assets decrease. Given that the purpose of superannuation is to provide an income in retirement, it is reasonable to expect people to draw on their capital until their savings are exhausted, and not just rely on income generated from their account's earnings," Ms Vamos said.
"The age pension and superannuation systems are strongly linked, meaning adjustments to one will impact the other. This is why we support a holistic review of the retirement income system, in order to ensure it delivers the best outcomes for Australia's growing number of retirees."
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