The Age Pension and Superannuation

This page is from the 2016 election campaign. I am leaving it here as a record.

The age pension and super annuation should interact in such a way that the age pension is affordable, such that superannuation tax concessions are affordable and such that that the elderly are properly provided for.

I think it is an obvious reality is that as life expectancy increases, the pension age must also increase. I believe it is a good idea to take the politics out of it and let statisticians set the pension age. We take a base year, say 2015, and a nominal pension age of 67. From 2016 onwards, we adjust the nominal pension age so that the remaining life expectancy at pension age as a proportion of the pension age remains constant. The Australian Bureau of Statistics would perform the calculations and set the exact age.

I say nominal pension age because the already legislated pension age of 67 is not yet phased in. Therefore the new system for determining pension age would also have to be phased in.

We should also set some sort of maximum target age, I am thinking around 90 to 92 (to be adjusted as life expectancy increases), where we don't expect, even for people with a lot of super, that their super needs to last them beyond that age. Obviously, many people don't have enough super to last them anywhere near that long. I think the arrangements for single retirees should be as follows:

Where retirees are a couple, and both retirees have enough superannuation until their maximum target age, their treatment in terms of accessing superannuation should be the same as singles.

Where retirees are a couple and neither retiree has enough superannuation to last until their retirement age, each retiree would have their individual target age calculated as for single retirees. When one retiree has reached his/her individual target age, he/she would then be paid an age pension as the difference between the single rate and the rate for a couple until the partner reaches his/her individual target date. From then on, the couple would just be regular age pensioners.

Where retirees are a couple and one of them has more superannuation than is required to get to the maximum target age and the other has not enough, then the arrangements should be something like the following: