Alliance Submission: Retirement Income Review Consultation Paper

Summary: Older Australians face barriers to employment such as age bias and caring responsibilities, leading to an increase in the number of older individuals on Newstart. The Age Pension system is based on home ownership, but declining rates of home ownership leave many older Australians disadvantaged. The income test for the Age Pension creates disincentives to continue working, with a high effective tax rate. Superannuation system in Australia is maturing, with more retirees having self-funding, but poverty rates among older Australians remain high compared to other OECD countries. Lack of engagement and understanding of superannuation among younger Australians is a concern, with complex policies and constant changes creating confusion. Means tests for the Age Pension create disincentives to save for retirement, despite the importance of increased savings for improved retirement incomes. Behavioral biases and lack of access to financial advice contribute to Australians taking lump sum withdrawals from superannuation, potentially compromising retirement income. Overall, there is a need for policy adjustments to address barriers to employment for older Australians, improve engagement and understanding of superannuation, and incentivize savings for retirement to ensure adequacy and self-sufficiency in retirement.