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Gradually increasing the preservation age to 65 would deliver the budget $7 billion a year in 2055, mainly because of tax revenue from wealthier households. Source: Supplied
RAISING the age when Australians can access their superannuation to 65 would boost the federal government’s budget by about $7 billion a year by the middle of the century, a report says.
The modelling from the Productivity Commission released on Tuesday also suggests households would be likely to delay their retirement by two years and see their super savings rise by 10 per cent.
The commission found most retirees are prudent in the ways they spend their super.
Less than 30 per cent of super benefits are taken as lump sums and when they are, Australians frequently use the amounts to pay down debt, invest or purchase “durable goods†to use through their retirement, the report says.
Liberal backbencher Andrew Laming says it’s no secret the federal government is looking to have people work for longer. “In a wealthy economy, where we’re all living longer, we do have to think about collecting superannuation later for the simple reason that it needs to last for our expected longevity,†he told ABC radio.
But Mr Laming warned there needed to be arrangements for people who pull out of the workforce involuntarily because of illness or redundancies and any rule change should happen very gradually.
KEY POINTS:
• Gradually increasing the preservation age to 65 would deliver the budget $7 billion a year in 2055, mainly because of tax revenue from wealthier households.
• Households would be likely to delay their retirement by about two years and will have super balances about 10 per cent larger when they retire.
• There will be a modest two per cent increase in the workforce participation of older Australians in 2055, mainly among those with higher wealth or near retirement.
• Changing the preservation age will have little, if any, impact on many older Australians who retire involuntarily.
• An appropriate safety net would have to be a priority for those who become involuntarily retired.
• Less than 30 per cent of superannuation benefits are taken as lump sums.
• When lump sums are taken they’re most frequently used to pay down debt, invest in income stream products and buy durable goods that are used through retirement.
• Any changes to the system should cater for diverse circumstances, because “one size†does not fit all.
(Source: Productivity Commission)