The Federal Government is to introduce a new fund to ease the burden on future generations of pensioners, in a bid to help fund a $2 trillion plan to replace the current pension system.
Key points:The fund will be funded by future taxation, not the pension systemThe fund is expected to be funded through future taxationThe fund, to be called Safe, Secure, Safe, will help fund the plan to reform the way Australians’ retirement funds are funded and is set to be introduced later this yearThe Treasurer has also promised to invest the fund in a ‘super fund’ for Australians with assets above $10 million, and that he would also invest the money in private equity firms to help ensure the fund is sustainable.
Key Points:The Federal Government will create a new Safe, Security, Secure fund to assist the future retirement of the pensioners fundThe fund has not been announced yetThe fund was previously announced as part of the Government’s plan to fund a ‘Superannuation Guarantee’ to help keep people out of debt, but the Government has yet to finalise its plan to do this.
The fund – which will be paid for by future tax, not by the pension fund – is set for launch in 2021.
“The fund that will be created to help Australians fund their retirement has never been announced,” Mr Hockey said.
“[It] has never even been considered as a fund, because the fund will not be paid out through taxation until 2021.”
Mr Hockey said the fund would be funded using future taxation.
“What we are looking at is a fund that is a safe, secure, secure fund,” he said.
“It’s not an insurance fund.
We will not fund it through the tax system.”
He said the scheme would be different to what it was before, as the fund was set to generate tax revenue rather than financial assistance to the future retirees.
Mr Hockey has said that he expects to announce a new ‘Super Guarantee Fund’ for the pension and super fund next month.
He will also announce new measures to help protect Australians’ financial security, including a new “safer and secure” scheme for people with large family assets.
“We will also be doing a lot of work to reduce the debt burden of future retirees, so that when they retire, they can get the financial security that they need,” he added.
Mr Morrison said the Government was committed to working with pensioners and the superannuation industry to reduce debt and help protect their future.
“Our Government has been committed to work with pensioner, superannua and other stakeholders to reduce their debt load and help them get to the stage where they can retire with the confidence that they deserve,” he told reporters.
“I would like to thank the industry for their hard work in helping us achieve this.”
The fund would have the ability to invest in private equities, and will be the first of its kind in the world.
The Government has set aside $1.4 billion for the fund, with Mr Hockey pledging to spend $1 billion on the fund.
The Treasurer also promised that a “superannuation fund” would be created for people over the age of 75.
Under the scheme, those aged over 75 who are eligible for a retirement annuity can choose between receiving a traditional or a superannual pension, and can choose whether or not to receive a guaranteed annuity.
However, if they choose the guaranteed annuities, the Government will provide the cash to cover the payments.
If the Government decides not to provide a guaranteed payment, the payments will be made to those who have already chosen the annuity, rather than to those currently on the plan.
This will ensure that people who already have a guaranteed pension, but who choose not to have a guarantee payment, will be eligible for the super fund.
Mr Morrison promised that the Government would be “proactive” in its approach to helping pensioners with the transition to a new system.
In November, the Treasurer announced the Government had agreed to make it easier for people to start saving for retirement, by raising the threshold for starting a savings account to $1 million.