GLEN BARTHOLOMEW:
Well we may now be in recession; we may be on the brink; it depends on which economists or politician you're listening to today.
One certainty is that the economic downturn is being felt everywhere; nowhere more than among the ranks of retirees, and people looking to retire in the next few years.
The downturn has undermined superannuation for retirees, and forced would-be retirees to stay in the workforce or settle for a reduced super income.
To look at the increasingly grim retirement outlook, Marius Benson is speaking to the Minister for Superannuation, Senator Nick Sherry.
REPORTER:
Senator Sherry, the Prime Minister last night said you are in deep and rolling consultations with the superannuation industry of Australia. What are they telling you at the moment?
SENATOR NICK SHERRY:
Well I think the central issue is one of confidence. The volatile investment markets have damaged certainty and caused deep worry, particularly amongst people who are in retirement or very close to retirement.
REPORTER:
And it's not just the emotions of uncertainty or worry, it's real; the money's gone.
SENATOR SHERRY:
Well what's occurred is that many people saw a doubling of their, their money or their account value in the five years up to the end of 2007. And then in many cases have seen it halve in the last 14 months. And this is causing uncertainty - the volatility.
So, with the industry - I mean I've had some very frank discussions about these issues, and there are obviously differing solutions, but there is a very strong determination that some fundamental issues around investment returns and the costs of operation will need attention, but they're not going to be issues that provide instant solutions or quick fixes.
REPORTER:
No, quite the opposite in fact. Nothing is going to happen in the short or medium term, which is where we basically live. In fact if, there's a lot of listeners out there who are retired or are going to retire in the next five years - there's nothing you're offering for them?
SENATOR SHERRY:
Well, there are a number of short-term matters we've already addressed, and will be addressing. Let me give a couple of examples. Relaxing minimum drawdown rules for account-based pensions for people who are retired.
We'd also wave capital tax, capital gains tax requirements for funds that merge. And obviously the, the other critical part of the equation in retirement incomes is the age pension, which the Prime Minster has indicated we'll be dealing with in the next few months.
They all help, but there are some deeper issues in our system that will require attention. I'm meeting with the Treasurer and the Prime Minister next week, and there will need to be some fundamental reform to the system around safety and certainty; the costs of operation; and we'll need to set out a, a pathway, and particularly a timing for reform. But, but, they're not going to be quick fixes.
REPORTER:
No, in fact, if people are listening and they're worried they might be thinking, half my money's gone - $50 billion has been tossed out by the government in the last few months, isn't there more that superannuation dependent people can receive from the government?
SENATOR SHERRY:
Well as I've indicated, an essential part of the, the retirement equation is the age pension. Two thirds of (retired) Australians are either on a full or part age pension. And superannuation just can't be looked at in isolation. And, the government has indicated that we've received a report from the Harmer Review, and that's an important part of the solution of retirement incomes.
As to superannuation, safety, certainty, smoothing out this volatility of, of very quick increases in value and then very quick declines in value, the costs, the fees, they're all issues that will be requiring attention.
REPORTER:
Just on the age pension, will there be a dramatic improvement in the pension in the budget?
SENATOR SHERRY:
Oh look, I'm not going to speculate on, on the level of change to the age pension. That will be announced in due course by, by the Treasurer.
REPORTER:
Senator Sherry, thank you very much.
SENATOR SHERRY:
Thank you and good morning to your listeners.
GLEN BARTHOLOMEW:
And good morning to you Senator Nick Sherry, the Minister for Superannuation, speaking with Marius Benson on ABC NewsRadio.