Age pension undermines super system, says FSC
Australia's superannuation system is being undermined by age pension eligibility, according to the Financial Services Council (FSC).
In its 2013-14 Federal Budget submission to Treasury, the FSC said Government should review the pension system to ensure the cost of the age pension was sustainable.
It said a couple with $750,000 in savings who owned their own home and received annual income of $45,000 was entitled to over $10,000 in age pension payments.
A new preservation age of 62 should also be phased in to increase retirement savings by $400 billion, reducing reliance on the age pension and increasing retirees' income, it said.
FSC chief executive John Brodgen also said claims that super tax concessions were unsustainable were untrue.
"Superannuation taxes will grow over 200 per cent within the next eight years.
"Earnings tax on a large and growing pool of national savings is clearly a source of revenue for the Government under current policy settings," he said.
Brodgen said the $14 billion concession on contributions was modest in the context of the $82.5 billion in total mandatory superannuation contributions received in 2011-12 (18 per cent).
"This is a modest level of support for a mandatory system that requires all working Australians to lock away 9 per cent of their income for up to 40 years," it said.
The FSC pointed to the $836 billion retirement savings gap that would cost the Government more through reliance on the age pension.
Brodgen said the Government should commit to not making any new changes to super between now, the next election and the first term of Parliament.
The FSC said Government should conduct an intergenerational report in 2013 to assess the impact of recent reform and tax changes to superannuation.
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