In its submission on the objective of superannuation, the Actuaries Institute said it wants objectives beyond the objective listed by the Financial System Inquiry that the superannuation system should provide income in retirement.
The Actuaries Institute is now calling on the government to provide objectives for the whole retirement system, with complementary objectives for each component.
Actuaries Institute president Lindsay Smartt said research shows most Australians will not have a sufficient amount of superannuation to live comfortably in retirement and will still require age pension payments at some period from age 67 onwards.
One of the objectives, he said, should therefore be: “To supplement the age pension in order to provide a combined level of income that allows Australians to live a dignified retirement.”
The Actuaries Institute also said that the process of determining what an adequate level of retirement income is should not be based on a percentage of a person’s pre-retirement income.
“A better approach would be to target a dollar amount which is determined after taking into account the after-tax income of the majority of working Australians as well as any relevant research into retirement living standards,” said the submission.
“For example, a suitable variation of the Association of Superannuation Funds of Australia [ASFA] ‘comfortable’ level might be appropriate.”
Mr Smartt said ensuring 50 per cent of Australians achieve the ASFA comfortable level using their superannuation savings and the age pension would go a long way to achieving a reasonable standard of living for most Australians.
The submission also said there should also be targets in place in relation to the proportion of Australian pensioners living below the poverty line, which is currently 36 per cent, according to the OECD.
“This might mean increasing the age pension or specifically targeting some pensioner groups. [For example], increasing rental assistance,” said the submission.
The submission also suggested restricting maximum withdrawal factors for income streams and establishing a limit on tax concessions on investment earnings supporting a superannuation income stream.
The investment earnings on amounts above $2.5 million, it said, should continue to be taxed at 15 per cent.