Retirement Income Review submissions

Key researchers

Project background and aims

The Australian retirement system, which has been ranked world-class1, is not perfect in its current design. In our view, there are two main issues with the structure of the current system, namely: the economic distortion created by the age pension; and the marginalisation of gig economy workers. Australia is the only country with its age pension based on both an assets test and an income test2. This means that the more assets and income people have, the less likely they are to access age pension entitlements in retirement. Additionally, the exclusion of family home in the asset test creates an incentive for retirees to hold on to a large house and live frugally on a very modest income, trying to stay eligible for the age pension. Other benefits attached to the pensioner concession card, including cheaper health care, medicines and other discounts creates further distortion to the economic behaviour of retirees to maintain their eligibility for the age pension. The means-tested age pension also creates disincentives for some individuals to save more for retirement.

For the above reasons, in this submission to RIR, we recommend making the age pension universal, as is the case for some of the other highly ranked pension systems in the world.

Read the paper