
Letters of 8 March 2021: Aged care needs super flexibility
Changes to superannuation should be added to life’s certainties. As soon as the government’s Retirement Income Review Final Report was released, the Treasurer Josh Frydenberg and Senator Jane Hume hit the press advocating for more flexibility to the superannuation system.
More flexibility sounds great but the changes being discussed include accessing superannuation for a range of personal expenditure, including buying a house, and opting out of the legislated increase to the contribution rate from 9.5 per cent to 12 per cent by 2025.
A premise of compulsory superannuation is to enable individuals to tax-effectively save for their retirement. Allowing individuals access to superannuation during the accumulation phase will erode account balances and put greater pressure on the government and taxpayers.
In 1975, there were 7.3 people aged between 15 and 64 for every Australian aged 65 and over. By 2055, the working-age-to-retirement ratio is projected to fall to 2.7. With around 71 per cent of people aged 65 and over currently receiving the age pension, or other pension payments, in the future there simply won’t be enough working taxpayers to fund the system.
A serious discussion about flexibility should address new strategies to self-fund retirement such as removing the inability for small to medium-sized business owners to meaningfully invest in their own businesses and replacing the contribution and transfer balance pension caps with a fairer tax system which assesses pension income streams during the drawdown phase.

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