Australia’s retirement income system is becoming unsustainable. This is not because too much money is spent on the age pension. Australia spends an average of 3.5 per cent of its GDP on age-related spending against an OECD average of 7.8 per cent.
Per Capita’s detailed analysis shows that unsustainability and inequality are the two emergent trends in Australia’s retirement income system. The changes being proposed by the federal government will make both of these problems worse because they ignore the role of private wealth in shaping people’s chances later in life.
The proposals currently in the budget will make the pension inadequate, and the retirement income system more regressive. This will stoke inequality and undermine the sustainability of Australia’s pensions and superannuation system, which has been regarded as world leading.