The Actuaries Institute, in its pre-Budget submission to the federal Treasury lodged last week, says that superannuation must be simpler and its purpose clear.
The Institute urges the government to simplify Australia’s superannuation regulations, review areas where retirees need extra support and legislate to make the overall objective of the retirement income system clear.
Among other things, the submission states:
Australians should be able to get good financial advice at an affordable price and funds should be able to confidently develop retirement income products ahead of changes due in 2022.
Trustees should develop default retirement products and be required to consider providing longevity protection along with appropriate information that outlines its benefits.
The appropriate superannuation guarantee (SG) rate is likely to be between 9.5% and 12%, but the submission states setting the levy is complex.
Some of the complex interactions that need to be considered include the government’s overall objective for the compulsory SG system, its interaction with the government-funded Age Pension, rental assistance and other forms of assistance that support older Australians.
In determining adequacy, assumptions around retirement income indexation, broken work patterns and involuntary early retirements also need to be considered. The linkages with savings in other assets, such as housing, are also important to understand.
Simplifying regulatory requirements
The Actuaries Institute submission also says the Government should consider simplifying regulatory requirements, such as merging the asset and income test, potentially including a portion of home ownership. It has also called for a review of rent assistance for retirees who are not homeowners.