Retirement income policy remains inadequate: IFSA

More work on retirement income policy is needed if the living standard expectations by the next generation of retirees are to be met, according to a major policy statement released by theInvestment and Financial Services Association(IFSA) yesterday.

The policy,Retirement Incomes and Long Term Savings - Living Well in an Ageing Society, identifies a retirement savings gap of $600 billion, and IFSA chief executive Richard Gilbert sees this as a “call to action” for policy makers to make changes to the current superannuation system.

“The foundations of retirement incomes policy are sound, but more work is needed to realise its promise that Australians who retire now, and under a mature superannuation guarantee system, see their living standards meet their reasonable expectations,” Gilbert says.

The key strategies outlined in the IFSA policy focus on boosting voluntary superannuation, simplifying superannuation tax, and maximising retirement income streams.

Recommendations include extending co-contributions on voluntary contributions to workers earning up to average weekly earnings, reducing the superannuation contributions surcharge, and removing regulations restricting the use of growth pensions - a recommendation also made by the Senate Select Committee on Superannuation in its recent Planning for Retirement inquiry report.

However Gilbert says while many of these reforms have been on the Parliamentary agenda for some time, their resolution is being stalled.

“Co-contributions and surcharge reduction would both help build retirement savings, yet both languish in the Senate,” Gilbert says.

“It is hard to understand why the Government is taking so long to look at growth pensions…we call on the Government to complete its review quickly, and to remove this outdated restriction.”