Define purpose of super and Age Pension: Mercer
The Government cannot properly define the objective of superannuation without, at the same time, defining the objective of the Age Pension, according to Mercer Senior Partner, David Knox.
Discussing the Government's process around the superannuation objective, Knox said it needed to be defined simultaneously with defining the objective of the Age Pension.
"Super should provide an income throughout your entire retirement, it is not intended for wealth accumulation and estate planning. We need to lock this into the overall objectives now to ensure an adequate and sustainable retirement income for Australians and to protect against ongoing tinkering," Dr Knox said.
He said alleviating fiscal pressures on the government also needed to be addressed in the objectives with Mercer believing that to do this the costs of the Age Pension and the superannuation tax concessions needed to be considered in combination over the longer-term.
"The cost of super tax concessions to the government is only part of our retirement savings and should not be considered in isolation. Concentrating on only one component will adversely affect the development of a sound and sustainable retirement income system," Dr Knox said.
He said it was not enough to state that superannuation should substitute or supplement the Age Pension.
"We need a clear and sensible line in the sand as to when it should move from supplementing to becoming a substitute and some rationale and clarity around the rate of substitution," Dr Knox said.
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