The government’s retirement incomes review should concentrate on boosting rent assistance and Newstart and fixing the pension assets test. These would achieve more than boosting super.
More older Australians are carrying housing debt later in life, or not owning homes at all, but lack suitable alternatives to the family home. The result is lower incomes in retirement.
People come in different shapes and sizes, which can make a one-size-fits-all retirement scheme uncomfortable.
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No single super contribution rate suits everyone, and there’s only a clear case for an increase if there’s no age pension.
Under the Institute of Actuaries proposal, only retirees with more valuable than normal homes would face an assets test, and only on that part of the value that was higher than normal.
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The inquiry will find we force workers to sacrifice income, pay tens of billions in super tax concessions, and still pay out one in every ten dollars of government earnings on pensions.
Superannuation has a smaller role in the retirement incomes system than is often suggested.
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Increasing numbers of older Australians face a harder time paying the bills when they retire because they’ll still be paying off a mortgage or renting a home.
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People over 65 who still have a mortgage or are renting are projected to double in number by 2031. The trend is likely to hit government budgets and leave more retirees in poverty.
Having more money now means less money, and more dependence, later.
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There is a case for not proceeding with, or at least deferring, the legislated increase in employers’ compulsory super contributions, but it isn’t the one the Grattan Institute makes.
“Churning” out of and back in to home ownership is becoming common. We haven’t caught up.
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It is widely believed that compulsory super saves the government money on pensions. It does, but nowhere near enough to pay for the accompanying tax concessions. Lifting compulsory contributions will make things worse, for a century.