RLC submission – Retirement phase of Superannuation Discussion Paper

Home Campaigns and Submissions RLC submission – Retirement phase of Superannuation Discussion Paper

As Australians continue to live longer, healthier lives, the Retirement Living Council (RLC) welcomes the opportunity to contribute to the important discussion around how retirees can be better supported to achieve a financially secure, dignified retirement.

Australia is experiencing a dramatic demographic shift, propelled by an ageing population. 

Over the course of the next two decades the number of people aged over 75 is expected to increase by nearly 70 per cent to about 3.4 million and will make up approximately 10 per cent of the total projected population. 

These changes will have far-reaching implications for the nation’s socio-economic outlook, including increased demand for healthcare, social services and aged care services. 

At the time of drafting, the RLC awaits the Australian Government’s response to the Aged Care Taskforce, which has publicly mooted the introduction of a new tax, user co-contribution or even using superannuation to fund the nation’s broken aged care system. 

The government’s 2023 Intergenerational Report identified that the largest asset held by Australian households has historically been the family home, indicating those who own their home generally have lower housing costs in retirement compared with renters, as well as a store of private wealth that can be drawn on in retirement. 

Unfortunately, a rapidly growing number of Australians are retiring with mortgage debt while the aged pension remains the main source of income for most retirees. 

This presents a difficult task for governments looking to ensure superannuation is the predominant income for retirement in an
equitable and sustainable way. 

The RLC’s recently released report, Better Housing for Better Health, outlines the value-adding contributions of the retirement living sector and presents a comprehensive overview of our role in addressing the needs of older Australians, and the potential for the sector to assist government managing the escalating costs associated with housing, health and aged care services. 

As evidenced in the report, nearly three quarters of people aged 75 and over are living in dwellings with one or more bedrooms spare. 

This represents more than 1.4 million older Australians that are residing in homes that are oversized for their needs, which can lead to trips, falls and increased interaction with healthcare services. 

Nearly 30 per cent of Australians over the age of 55 are considering ‘rightsizing’, however high costs associated with rightsizing disincentivise older Australians to move.

Increasing resident’s eligibility for financial support and exempting a portion of home sale proceeds from the age pension asset test could encourage more rightsizing, which then also injects more housing supply into the market for singles, couples and growing families. 

The Superannuation Discussion Paper identifies the three pillars of the retirement income system as superannuation, the aged pension, and voluntary savings which include voluntary super contributions, housing and other assets. 

The interaction between these pillars will vary depending on the individual circumstances of retirees, however the RLC has identified inequitable access for retirees to important government financial support payments such as Commonwealth Rent Assistance and the Home Equity Access Scheme. 

The RLC therefore submits the following recommendations for your consideration: 

1. Exempt a portion of home sale proceeds from the age pension asset test to reduce the financial disincentive for those considering ‘rightsizing’ while ensuring the security of their pension long term. 

2. Remove incoming purchase price benchmarks for Australians living in retirement communities to allow deeper access to Commonwealth Rental Assistance. 

3. Amend existing inconsistencies to allow Australians living in retirement communities to access the Home Equity Access Scheme.

RLC submission - Retirement phase of Superannuation Discussion Paper