Push to make workers wait longer to access funds

John Brogden, the chief executive of the Financial Services Council, says the age at which people can begin drawing on their super the "super preservation age" should be moved much closer to the pension eligibility age. The pension eligibility age is 65 at present, but will be progressively lifted to 67 over the next decade.

Speaking at the Financial Services Council annual conference on the Gold Coast yesterday, Mr Brogden said older workers needed to stay in the workforce longer to drive economic growth and relieve pressure on government finances.

He noted the average life expectancy for men and women had increased in the past two decades, meaning more people drew the aged pension for longer.

"The time has come to consider whether the superannuation preservation age of 60 is still appropriate," he said. "The increase in the age pension eligibility age to 67 opened the gap between access to superannuation and eligibility for the age pension to seven years.

"[This] has a negative impact on retirement savings as it will accelerate consumption of superannuation before retirees become eligible for the age pension," he said. The increase in the pension eligibility age will be phased in between 2017 and 2023.

Yesterday, a spokesman for Superannuation Minister Bill Shorten said the government had no plans to alter the preservation age.

In April, the International Monetary Fund warned that the sustainability of retirement funds and pension schemes would be severely tested if governments did not move quickly to lift the pension age in line with rising average life expectancy.

"Unexpected longevity, while clearly beneficial for individuals and society as a whole, is a financial risk for governments and defined-benefit pension providers, who will have to pay out more in social security benefits and pensions than expected," the IMF said in its half-yearly Global Financial Stability Report.

"It may also be a financial risk to individuals, who could run out of retirement resources themselves."

Yesterday Mr Brogden said lower-income workers would benefit most from lifting the super preservation age. Raising the age by two years would reduce their personal savings gap by 30 per cent.

The Financial Services Council is the peak body for Australia's retail superannuation providers.