Support for SG increase
An increase of the superannuation guarantee (SG) has emerged as one of the key messages arising from the submissions to the Government’s current review of retirement incomes.
Key messages from the submissions included proposals that the retirement income system allow individuals to save in retirement, as well as encourage individuals to work into retirement. Another recommendation was to facilitate transitions between work, self-funded retirement and the age pension.
The Australia’s Future Tax System Review panel released two consultation papers yesterday, addressing the complexities of the retirement income and current personal taxation/transfer systems.
The papers canvassed responses by members of the community to consultation questions relating to the SG, existing health and aged care services, including the adequacy of the age pension, and superannuation income tax concessions, and the role of government in the retirement income sphere and in relation to self-employed individuals partially or fully excluded from the SG system.
Responses indicated support for the existing three-tired retirement income system (age pension, compulsory savings and voluntary savings), while recommending various changes, including an increase to the current SG of 9 per cent and consideration of a better method of dealing with the risk of people outliving their savings and assets.
The Rudd Government’s steps to reviewing the retirement income system have been supported by the Financial Planning Association (FPA).
“Government policy should encourage Australians to save through retirement and to smooth the transition between work and self-funded retirement and the age pension,” said the FPA’s chief executive, Jo-Anne Bloch. “This would greatly enhance retirement adequacy and reduce reliance on social security benefits.”
The FPA supported an increase in the SG and encouraged deferral of the age pension.
The papers also covered personal tax and transfer issues, with submissions calling for higher marginal rates for high income earners and reductions in effective marginal tax rates, as well as expressing concerns about the adequacy of income support and transfer payments.
The documents also indicated a range of views relating to whether the retirement income system should be separate to that of working age.
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