Australia: Law to spell out that super is for retirement income
Source: Asia Insurance Review | Jun 2016
Canberra has announced that it will enshrine in law that the objective of superannuation is to provide retirement income to substitute or supplement the government-funded Age Pension.
“As Australia’s population ages, it is becoming increasingly important to ensure that the superannuation system is based on a clearly stated objective, is providing the right incentives to save, and is flexible enough to ensure all Australians are given the opportunity to enjoy a fulfilling retirement,” the statement from the Treasurer said.
The government will embed the objective of superannuation in a stand-alone Act, with an accountability mechanism to ensure that new superannuation legislation is considered in the context of the objective.
Longevity risk remains a threat in Australia. Research findings by the consultancy firm Mercer released in 2014 showed that one in four Australian retirees would outlive their savings by 11 years. As many as 10% of the population who live even longer may be forced to rely solely on the Age Pension for 15 years or more, with 54% of Australians expecting to have less money than they need for retirement.
Research shows though that the majority of Australian retirees are converting their superannuation into pension streams rather than taking a lump sum.