Australia's Future Tax System

Retirement Income Consultation Paper

Introduction

The Treasurer wrote to the Review Panel on 4 November 2008 asking it to bring forward its consideration of the retirement income system. This is to allow the Government to consider the issues facing the retirement income system in conjunction with those arising from the Pension Review due in February 2009. This request has not changed the original terms of reference to preserve tax‑free superannuation payments for people 60 years or older. The terms of reference are included in Appendix A.

The Panel is to report to the Government its findings on the retirement income system by the end of March 2009. The Panel is seeking community input to help develop the final report. The Panel is inviting written submissions from the public by 27 February 2009. The Panel may initiate meetings with representative organisations for further discussions on the retirement income system.

This paper highlights key design issues that, in the Panel's view, would benefit from further community discussion before policy directions are determined. The issues are not exhaustive. The Panel has highlighted issues it considers to be central to the design of the retirement income system as it relates to the request in the Treasurer's letter. Consultation is not limited to these issues, although comments are encouraged on broader issues through the consultation process for the Panel's Consultation paper.

The retirement income system was substantially changed in the latter part of the last century to respond to one of this century's greater socioeconomic challenges, the ageing of the Australian population. This will increase demand on government support to the aged when the number of individuals of working age is declining. In reviewing the retirement income system, the Panel will focus on the features that are required to best meet the needs of society in the 21st century.

Superannuation and retirement incomes have attracted considerable interest in the consultation process. Of the approximately 500 formal submissions received by the Panel around 20 per cent focus solely on these issues or include them as part of their views on the tax‑transfer system. The key messages from these submissions are outlined in this paper.