We should scrap super and create a universal pension 5



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Financial experts believe Australians aged over 60 would be better off with a universal pension, rather than our current superannuation system.

According to economist Geoff Carmody, who was previously a senior officer with the Commonwealth Treasury, a universal pension would be cheaper and fairer for everyone.

“An age pension for all is a… more efficient option than the present means-tested age pension, plus compulsory super or tax concessions”, Mr Carmody explained.

A universal pension would overcome the “cluster of tax breaks” often associated with superannuation, Mr Carmody claimed. One pension to fit all could be a cheaper solution too.

“The current pension-plus-super system costs about $74 billion now”, Mr Carmody said. “An age pension for all would cost $68 billion”.

The Aussie economist also believes that a universal pension would be fairer. The idea “breaks the link between paid employment and retirement income”, Mr Carmody said.

A universal pension could eliminate any bias against women or Australians who have limited employment histories. It could also empower over-60s to stay in the workforce for longer.

“The current means-tested pension imposes an effective marginal tax rate (EMTR) barrier discourages pension-age people from continuing to work”, Mr Carmody said.

“There’s much lip service about the need to increase workforce participation among older people”, Mr Carmody explained. “A universal age pension eliminates this disincentive to continue working”.

Mr Carmody also believes a universal pension would be simpler. There’d be “no need for costly bureaucracies administering complex means tests, with which pension-age people need to comply”.

“On Wednesday, the government launched a discussion paper on the enshrining of a formal objectives of compulsory super in law”, Mr Carmody added. “But isn’t there a better way?”

Do you agree that a universal age pension would be better for over-60s? Would you like to see Australia’s current super system overhauled?

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  1. How about an individual example and a comparison. What would happen to the billions of super money invested on the stock market.

  2. have a look at England , theres no such thing as tax time everyone pays in over their working life

  3. New Zealand has a universal superannuation, paid out of taxes. (The pension ). Nobody is penalised because of the amount of paid employment done over their working life. Everyone gets the same. If many have been fortunate enough to have also paid into a private superannuation scheme, even then, their pension is not penalised. Depending on one’s lifestyle, the pensio is either enough or not… I have a small nest egg which helps to supplement my pension, but I could get by without that….just allows me more freedom in what I can buy.

  4. I recall my Grandfather reflecting that he used to pay 7p in the Pound (<4%) income tax and the Government of the day introduced the old age pension where income tax was then levied and his % income tax doubled to about 8%.
    This means we've (and all income earners since this was introduced in the 1930's) all been contributing to the pension fund managed (sic) by the government.
    The problem was that this all was swallowed into consolidated revenue rather than within a dedicated pension investment account and so we have seen these funds depleted by inappropriate funding allocation to promises without any return on what really is our investments.
    What we should be doing is demanding that the pension funding be audited from inception re the apportion of income tax from us and that this be reallocated from consolidated revenue for dedicated pension support.
    If this were done, I'm sure that there would be a responsible surplus available for aged support, etc. and where the funds were poured into creation of infrastructure, we should see a reasonable return from that investment feeding the pension fund.

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