A universal Age Pension would reduce the cost of the projected superannuation tax concession, increase the level of take-home pay, and increase tax revenue, according to Mercer.
In its submission to Treasury for the Retirement Income Review, Mercer said the universal Age Penson was means-tested the superannuation guarantee (SG) would need to increase to 12%.
The firm called for a universal Age Pension to be considered, to scrap the means test, and simplify the Australian retirement system.
Mercer senior partner, Dr David Knox, said a universal Aged Pension with the right tax structure would be feasible without a substantial impact to the budget.
Knox said it would also give Australians an incentive to save for retirement as this “isn’t the case today”.
“While the Age Pension would be taxable, there would be a clear benefit to the individual for every extra dollar contributed into super, ensuring the three pillars of the system – the Age Pension, compulsory super and voluntary contributions – are complementing each other,” he said.
The submission noted funding costs that needed to be considered were:
The submission said the universal Age Pension would:
“While the universal Age Pension may not be a viable option in the current political environment, it is a compelling proposition for a simpler, more effective system with a clear objective that delivers stronger long-term retirement outcomes for older Australians,” Knox said.
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