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Financially speaking, times are extremely difficult. We would probably all agree that we need to buckle down and make some sacrifices to help bring Australia out of the worst recession it has seen since the Great Depression. But how far should we go? When should we yell “Foul!” to the strategies proposed by the government? Former Prime Minister Paul Keating thinks it’s time to start letting those in power know that enough is enough.
Keating, along with former ACTU boss Bill Kelty, created the superannuation system in the early 1980’s. When the system was designed, Keating was the nation’s Treasurer, and he supported the plan during his term as Prime Minister.
The superannuation system was designed to allow contributors access to their savings when they were between the ages of 55 and 60, although the retirement age was set at 65 years of age. Treasury Secretary Ken Henry has recommended raising the age of superannuation access to 67 years, the new retirement age. The changes to the superannuation accessibility would be imposed by 2023.
Both Keating and Kelty are opposed to the recommendation. Kelty commented that the proposed change to the system would “destroy the scheme as we know it.” According to Kelty, the superannuation system would become a burden to Australian citizens rather than the benefit it was designed to be. Keating remarked that he didn’t have a problem with the retirement age increasing, considering that life spans have increased, “but privately paid-for superannuation is altogether a different thing.”
Keating added, “Superannuation was and is designed as a privately provided complement to the ‘tier one’ public pension. Were superannuation to be seen simply as some kind of substitute for the public pension, then the essence of it, the salary sacrifice in it, would be pointless. This is why the superannuation access age is already lower than the pension age of 65. It should stay as it is. It provides people with flexibility. They can buy an annuity income and perhaps also do some part-time work.”
Superannuation funds are compulsory for every working Australian. The question is whether the Australian government should even suggest that contributors need to wait up to an additional twelve years to be able to reap the benefits of their years of saving. The superannuation scheme has put Australians in a much better position than workers in other countries around the globe. After consistently saving money for our retirement years, is it fair that a few lawmakers can make us wait until we’re 67 years old to access this money - especially since our understanding was that it would be available to us by the time we were 60? Undoubtedly, many Australian feel like they have been duped into saving money that may be put out of their reach for longer than they expected.
If Paul Keating and Bill Kelty have their way, the access age for superannuation funds won’t change, and Aussies will be able to tap into their savings before they reach retirement age. But Ken Henry has another idea. This is one topic we can’t afford to ignore.
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