Australia's government has commissioned an independent review of the country's retirement income system, responsible for evaluating both its current state and whether it is will prove fit for purpose as lifespans lengthen and the population ages.
A joint news release Friday by Treasurer Josh Frydenberg and Jane Hume, assistant minister for superannuation, financial services and financial technology, said the review will look at the three existing pillars of retirement income: Australia's means-tested age pension; its compulsory superannuation system; and voluntary savings, including homeownership.
The news release said a consultation paper will be released in November, with a final report to be delivered to the government by June 2020.
Michael Callaghan, chairman of Australia's Aged Care Financing Authority and a former executive director of the International Monetary Fund, will head the review, while Carolyn Kay, a member of the Board of Guardians for Australia's Future Fund and Deborah Ralston, a professorial fellow in banking and finance at Monash University who recently served as chair of the Alliance for a fairer retirement will serve as panelists.
Commissioning a review was a recommendation of Australia's Productivity Commission in its January report on Superannuation: Assessing Efficiency and Competitiveness.
The Productivity Commission said the review should include:
- The net impact of compulsory super on private and public savings.
- Distributional impacts across the population and over time.
- Interactions between superannuation and other sources of retirement income.
- The impact of superannuation on public finances.
- The economic and distributional impacts of the non-indexed $450 a month contributions threshold.
The Productivity Commission said the review should be completed in advance of any increase in the Superannuation Guarantee rate.
The rate — the percentage of an employee's wages employers have to pay annually into an employee's individual superannuation account — most recently rose to 9.5% from 9.25% for the fiscal year that began July 1, 2014.
The next planned hike will see the rate rise to 10% from the fiscal year beginning July 1, 2021 and gradually climbing thereafter to 12% from the fiscal year beginning July 1, 2025.
