Super must evolve as population ages

28-Jul-2017

By Megan Tran

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Superannuation fund trustees must urgently consider the changes needed to make the super system more efficient and competitive as the ageing population causes capacity constraints on government spending in the retirement space, according to PwC and ANZ Wealth.

Speaking at the FSC Leaders’ Summit 2017 in Sydney this week, PwC partner and director Cathy Nance said the debate about where better retirement resources would come from was a global issue, not one specific to Australia where spending on pensions had increased to 20 per cent of the federal budget.

She said that at the same time tax concessions around super were being eroded.

“We’ve already seen the [age pension] asset test come back from January 1 and that will go one way as well,” Nance said.

“l feel like I’m a [member of a ] very fortunate generation where we’ve enjoyed the bulk of the tax concessions for super and housing. The next generation won’t enjoy those levels of tax concessions ever again.”

Nance said the impact of the ageing population meant it would be harder for super funds to “get the voluntary dollar out of members” because there were many competing costs around health and housing, so super funds would need to work harder to engage members.

ANZ Wealth head of superannuation Mark Pankhurst echoed Nance’s position, questioning if the tax and governance setting around super was now adequate given the large number of retirees leaving the work force in coming years.

“[During] the last 10 years, government assistance on aged care rose about 50 per cent,” Pankhurst said.

He spoke about being a carer for his mother who is now in an aged care facility to illustrate the extent of demands on the public system.

“The process to get one [facility] to manage her health took four years, the wait is frightening and until you’ve walked in those shoes you have no idea,” he said.

“I was someone who worked in the industry and thought I knew it all but I don’t know any of it.”

He said more planning should be taking place as the population ages, including tightening eligibility around the pension, the inclusion of the family home in asset tests, and pushing more retirees towards the self-funded route.

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