Policy report

Implications of the Retirement Income Review: public advocacy of private profligacy?

Retirement savings Retirement income Home ownership Intergenerational wealth transfers Superannuation Australia

The recent Retirement Income Review (RIR) implies policies that would reduce after-tax returns to super saving, encourage faster spending of life savings and of equity in the family home, and minimise bequests.  Its approach would incline each generation towards consuming more fully its own lifetime savings.

This paper demonstrates the RIR relies on contested Treasury ‘tax expenditure’ estimates that use a hypothetical benchmark that is biased against all saving, but particularly against long-term saving.

The RIR implies policies should encourage faster and more complete consumption of superannuation capital and housing equity in retirement to prevent some retirees’ wealth rising and ending in bequests.  But with savers’ equity in their houses typically about double their savings in superannuation, no prudent acceleration of super spending is likely to overtake inflation of housing prices in an era of fiscal and monetary stimulus and asset price inflation.

Related Information

Retirement Income Review: final report https://apo.org.au/node/309611

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CIS Analysis Paper 19