In 2016, CSRI carried out a comprehensive review of the retirement income system, building on the findings of the work of the Murray review, the Cooper Review and the Henry Review. This was a collaborative effort involving industry, consumers, government and academia. The aim was to develop long term policies to create adequate and sustainable retirement incomes for all Australians.
The scope of the CSRI review included:
- Determining the adequacy of retirement incomes, including the role of housing, when the system is mature.
- Encouraging greater self-provision with a view to improving system sustainability. We looked at the interrelation of superannuation, tax and age pension means testing.
- Developing the post-retirement system to ensure efficient use is made of superannuation balances to generate stable and secure incomes.
We found that while the retirement incomes system has considerable strengths, there is also significant room for further reform to improve the adequacy and sustainability of outcomes.
Our full report on the review outcomes and suggested policy directions is available for download here. It includes policy principles to guide reform alongside 47 specific proposals aimed at substantially improving the system’s effectiveness.
The CSRI integrated reform programme provides a range of policy proposals that have wide, though not universal, support that would improve the adequacy and sustainability of retirement incomes. As such it serves as a sound basis for judging policy measures for consistency with community benefit and an integrated approach.
With eyes on the federal budget next week, the Government should resist pressure for changes to the superannuation tax regime other than those that would reduce system complexity. Flagged proposals, such as providing an exemption to the $1.6m cap that can be transferred to the pension phase for people downsizing the family home, would only undermine the government’s significant progress on super tax reform.
Genuine reform would mean looking at the age pension means test treatment of housing – traditionally a no-go area, but one that is gaining community acceptance in improving retirement outcomes and perhaps offering some solace for younger people wishing to buy established homes.
The CSRI integrated package provides a useful benchmark against which policy measures can be evaluated for consistency with broader retirement income objectives.
Further engagement is needed now to agree priority areas and build support for the direction of change. We will consult further over the coming weeks on the way forward.