Age Pension a must for least wealthy
The least wealthy parts of Australia will be completely dependent on the Age Pension to sustain even a modest lifestyle in retirement, while the younger group will be slightly better off due to the superannuation guarantee (SG).
Such is the finding from a retirement incomes white paper released by the Actuaries Institute and prepared by Rice Warner, which said half the older population relied heavily on the age pension.
The white paper looked at a cross-section of age, gender, income and marital status and created an intergenerational profile of the super and retirement income system.
President of the Institute, Estelle Pearson, said: "This significant report reinforces many of the key recommendations in the final report by the Financial System Inquiry, particularly its call for an overarching approach to retirement incomes which must include, a review of superannuation tax incentives, the fiscal sustainability of the Age Pension, and when the Superannuation Guarantee will be increased."
"Policymakers need to factor all of these aspects into the debate to make the right decisions about our future," she added.
The report called for retirement income policy that fosters simplicity in retirement so that retirees could boost their income without having to seek expensive financial advice.
The report found the Age Pension consisted of 93 per cent of total retirement income for the bottom fifth percentile in terms of wealth, 73 per cent for the 25th percentile, and 44 per cent for the 50th percentile.
The report said those in the higher wealth bracket will still be eligible for part or full age pensions.
Those in the 75th percentile and higher could expect to have superannuation funds of more than $600,000, and would have access to a wide variety of product/investment options to assist them in managing assets for their retirement.
Those in the 50th percentile could expect around $300,000 for the older group and around $450,000 for the younger groups. They could expect to look at different product/investment opportunities to balance the risk while being supported by the age pension.
Those in the 25th percentile or lower could expect to have super funds of $100,000 for the older groups and $150,000-$250,000 for the younger groups.
Most of their income will come from an age pension: a single male could expect $419,000 while a female could expect $482,000. They will have limited product/investment choices.
AUTHOR
Malavika Santhebennur
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