Treasurer Josh Frydenberg will kick off a review into retirement incomes of Australians, including superannuation, pension and taxation.
In an interview with the AFR, Frydenberg said he would consult with cabinet and Treasury to take up the Productivity Commission's recommendation that the whole system be reviewed.
"My intention would be to establish that review," he said.
On the table for possible reform is restricting union and employer involvement on the boards of industry superannuation funds – by mandating a minimum percentage of independent directors to be included.
Tax breaks on super payouts will also be examined, with the Productivity Commission questioning whether the compulsory superannuation system is having the effect first imagined almost 30 years ago.
The whole point of mandatory superannuation was that it took the reliance of retirees off the government pension, but the large amount of tax breaks now given out to super payments could be cancelling out this effect on the federal budget.
Compulsory super could also currently be disadvantageous to the poor – by depriving them of income that could immediately be used for necessities – but great for the wealthy, who enjoy generous tax concessions.
Mandatory superannuation is set to rise from 9.5 per cent to 12 per cent gradually between 2021 and 2025. The Productivity Commission recommended the review be completed before that kicks in.
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Grattan Institute fellow Brendan Coates told Fairfax Media that a review was long overdue.
"We need to work out the target for an adequate retirement income and what the trade-off should be between living standards while working versus in retirement," he said.
"We still haven't worked out what the purpose of the system is and how the different parts of it work together… We are still providing such large super tax breaks too."
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