By Anne-Marie Ellias, COTA NSW Policy & Communications Manager

Australia’s retirement income system is based on three pillars:

• A government provided, means tested Age Pension;

• Compulsory Superannuation contributions and savings through the Superannuation Guarantee (SG); and

• Voluntary savings through superannuation and other sources.

The benefits of the SG will not be seen fully until 2037 when employees retire after 35 years of compulsory 9% superannuation contributions.

The global financial crisis has had a devastating impact on self funded retirees, particularly those who have invested their superannuation in the share market and/or relied on the interest from their investments. In September 2008  FACSIA reported that 50,000 self funded retirees had applied for the Age Pension (from September 2007 to September 2008) a staggering 40% increase on the previous year. This increase was, in part, due to changes to the eligibility for the Age Pension and occurred prior to the financial crisis and subsequent freezing of assets, that came later in 2008 which saw a 50% surge in age pension applicants.

COTA NSW is concerned with self funded retirees and await the upcoming Harmer Pension Review and the broader Henry Tax Review to see if the government can provide the much needed vision and flexibility in the retirement income system. In an ideal world, the Harmer and Henry Reviews will recommend a retirement income system which is adequate, robust and sustainable. In particular the system should be flexible and responsive to individual circumstances and account for people outliving their retirement savings and enable people to combine paid work with the age pension and/or superannuation.

As the Harmer Review is being handed down in February 2009, we would like to continue to represent the concerns of self funded retirees and pensioners to the media and government.  COTA is seeking to document the reality of living as a self funded retiree in the current climate, exploring how can the government better support our seniors in living financially secure lives. We especially would like to hear from those retirees who have applied for the Age Pension, those who have returned to work or continue to work post retirement.

Please contact the Policy team at policy@cotansw.com.au or (02) 9286 3860 or Toll free on 1800 449 102