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Frydenberg unveils Retirement Income Review

The federal government's landmark review into the nation's retirement income system left no stone unturned in examining the "complex" structure but fell short of making any recommendations.

In releasing the 648-page report this morning, Treasurer Josh Frydenberg presented "evidence-based, independent" findings of the Retirement Income Review with Minister for Superannuation, Financials Services and Financial Technology Jane Hume, that will form the foundations of future policies.

The review went through the three pillars being the Age Pension, compulsory superannuation and voluntary savings with a fine tooth comb.

Frydenberg said the review has established a fact base that will improve understanding of how the retirement income system operates, better informing public policy and the retirement outcomes delivered to Australians.

Frydenberg stopped short of confirming that the legislated superannuation guarantee (SG) will not go ahead next year, citing that "we are living in a different economic environment" thanks to the global pandemic.

"We will consider this report and other views and we will make a decision in light of current circumstances before that scheduled increase takes place," he said.

The SG is meant to increase from 9.5% to 10% on 1 July 2021. On 1 July 2025, it is slated to reach 12%.

The coronavirus has sent shock waves that have impacted wages, the economy, and labour markets, he said, adding that the government needs to make a decision on whether on not to increase based on the economic facts at the time.

Frydenberg took into account arguments from the Grattan Institute and the governor of the Reserve Bank of Australia to consider carefully the tradeoff in increasing SG and having less money in people's pockets.

Hume flagged that better retirement income products are on the way and that the financial advice industry will play an important role in helping members navigate the complexities of the system.

Most Australians do not have financial advice for a number of reasons, she said, as the cost of advice is expensive and many distrust the system.

The government is looking to improve these elements at the moment, she said, working with the advice industry and ASIC to reduce the red tape and increase the professionalisation of financial advisers.

Pointing to the super gender gap, Hume does not see the gap closing but narrowing over time.

Read more: SuperannuationRetirement Income ReviewJane HumeJosh Frydenberg
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