Financial Exec Suggests Raise in Preservation Age

Australia’s Financial Services Council chief executive John Brogden is suggesting the government should change the preservation age of 60 years old for workers to start drawing on their superannuation savings, to an age that is much closer to pension eligibility.

Speaking before the council’s annual conference, Brogden said that aging workers must remain active in the workforce longer to help with the economy and give the government a reprieve from its finances, particularly with superannuation benefits.

Brogden suggested workers should wait at least two more years before drawing from their super funds, saying that the current system poses a negative impact on retirement money. He added that it would accelerate consumption of super even before retirees become eligible for pension.

The Financial Services Council is one of Australia’s superannuation providers.

Pension eligibility age is currently set at 65 years old and the government plans to lift this to 67 years old in the next decade. Despite this, the government has no plans of changing the supernannuation preservation age.

The International Monetary Fund (IMF) early this year has said that retirement funds have limited sustainability and funding problems may develop if the government does not act on it.

The IMF has also said that there is a financial risk to any government that do not factor in “unexpected longevity.” Even individuals are at risks, when they will eventually run out of retirement money.