Media Release by Senator the Hon Kay Patterson

Improvements to retirement income policy

The Minister for Family and Community Services, Senator Kay Patterson, today welcomed the launch of the Government’s Statement “A more flexible and adaptable retirement income system”.

This reaffirms the Howard Government’s continued commitment to senior Australians, to provide greater choice and improved access to higher incomes in their retirement.

Senator Patterson said the statement outlined a number of initiatives designed to improve access to the retirement income system while ensuring it remains flexible, fair and affordable to taxpayers.

But above all it is about maximising returns for senior Australians for their lifetime savings.

Senator Patterson said: “Assets test concessions will be extended to include a new type of income stream investment which can’t be converted into a lump sum and provides people with returns that are linked to the investment market.

“Fifty per cent of the value of these products bought from 20 September 2004 will be exempt from the social security assets test.

“Currently, some types of income stream investments which cannot be converted into a lump sum are totally exempt from the assets test. However, to make sure the system remains fair the existing assets test exemption will change.

“Fifty per cent of the value of these investments purchased from 20 September 2004 will be exempt from the assets test. The existing 100 per cent assets test exemption for these products bought before that date will continue.

“As the Treasurer has said, the age pension and savings through Superannuation Guarantee contributions provide people with a firm financial base for retirement. However, if people want higher incomes when they retire they will need to consider making additional retirement savings.

“One way people of workforce age can do this is to increase their voluntary superannuation and other savings.

“Staying at work longer is another way people can improve their retirement savings. Retiring early from work means people may dip into their savings early and this reduces their income in retirement.

“However, the Government knows that the age pension will continue to be important for the majority of retired Australians, but we also have to ensure that it remains targeted to those most in need.

“The Australian Government is committed to maintaining the age pension as the cornerstone of the Australian retirement income system. It also provides incentives for people to support themselves in retirement through buying income streams.”

The public can call the Centrelink Retirement Line on 13 23 00 for general information about the changes.