Council on the Ageing (COTA) Australia, the peak body for older Australians, welcomes the introduction of a new Retirement Income Covenant for superannuation funds, which will commence a new stage of our superannuation system that supports Australians to not only grow wealth, but plan to ensure they have adequate and secure retirement income.
“Legislating the Retirement Income Covenant is a very positive step towards a more adequate and sustainable retirement income system for all Australians and will help correct some damaging popular misconceptions about our superannuation system,” says Ian Yates AM, Chief Executive of COTA Australia.
“Superannuation was never intended as a ‘nest egg’, but an investment that generates someone an ongoing income in retirement. The egg is supposed to hatch into an income stream”
“Embedding retirement income planning in super funds will both help ensure they serve their true purpose and improve financial literacy among Australians.
“COTA has advocated for this legislation for many years, and we are very pleased to see it pass Parliament today.”
Mr Yates also urged the Federal Parliament to pass amendments before the Senate today requiring employers to pay super contributions to workers earning less than $450 a month, to ensure workers on low wages can still save for their retirement.
“Superannuation should be paid on every dollar earned, no matter your income. Removing the $450 threshold for employer contributions will help remedy a massive inequity in the current system,” says Mr Yates.
“These amendments will also address gender inequity that sees Australian women retiring with significantly less superannuation than men.
“Parliament must pass these amendments before the March budget, preferably today, to make sure low-income earners are no longer penalised by our superannuation laws.
“Failure to do so may mean that industry and employers won’t have the time to set up their systems for a 1 July 2022 start. This may mean low-income earners have to wait another year before they start to receive their long overdue superannuation.”
