The Government is pleased to launch today the Australia's Future Tax System (AFTS) Report on the retirement income system prepared by the AFTS Review Panel.
This vital report accompanies historic measures in today's Budget to boost the level of the pension so that older Australians can live in dignity through their retirement.
Importantly, these measures have been delivered in a way which is responsible and sustainable over the long-term. In the middle of a global recession that has wiped over $200 billion from expected Government revenues, this has required tough decisions elsewhere in the Budget.
The Government welcomes the Retirement Incomes Report as laying the foundations for a retirement income system that meets the challenges of adequacy, fairness, simplicity and sustainability in the context of an ageing population.
The report finds that Australia's three-pillar retirement income system - consisting of the means tested Age Pension, compulsory saving through the superannuation guarantee and voluntary saving for retirement - is well placed to meet these challenges and should be retained.
The Panel found that tax-assisted voluntary superannuation contributions should be more fairly distributed, and questioned whether the current cap on the concessions was appropriate. The Panel also recommended that the Age Pension age should be gradually increased to 67.
Therefore, in conjunction with the pension reforms, the Government has moved to improve sustainability and fairness in the retirement income system in the 2009-10 Budget, through reducing the concessional superannuation caps and adopting the Panel's recommendation on the Age Pension age.
The Government notes the Panel recommends retaining aspects of the current system, with improvements to ensure that key challenges can be met in the longer term. The Panel recommends that:
- The current superannuation guarantee provides an adequate rate of compulsory saving and should be retained at 9 per cent
- The age at which Australians can access their superannuation (the preservation age) should be gradually increased to 67 years, subject to further examination of how mandatory retirement ages should be treated. This would complement the Government's decision to adopt the report's recommendation to increase the Age Pension age to 67 years.
The Government notes the Panel's decision to defer final recommendations on other related issues until the December report to enable consideration in the context of the broader tax-transfer system.
The Government would like to acknowledge that the work of the Panel was greatly assisted by the many individuals and groups who provided submissions to the Panel or participated in direct consultations with the Panel, including the public consultation meetings. A range of issues that were raised in these submissions and consultations are not expressly dealt with in the Panel's report released today. However, they will be taken into account in the final report due in December 2009, as they should be considered in conjunction with the Panel's recommendations on the broader tax-transfer system.