| Abstract: | The development of a sound and sustainable retirement income system is currently an important social, political and economic issue around the world as many countries face a range of pressures including an ageing population, low national saving levels, maturing Social Security programs and changing employment patterns. As a result of these pressures, the World Bank has advocated a three-pillar system which is broadly reflected in the current Australian arrangements. However, further reform is planned in Australia. The 1995–96 Federal Budget announced a proposal to introduce compulsory minimum employee contributions of 3 per cent of earnings, together with a matching income-tested government contribution. The proposal for government contributions is analysed in this article and an alternative approach is proposed. The important related issues of the taxation of superannuation and the integration between superannuation and the government-funded age pension are also reviewed. As a result, recommendations for change are made to encourage a stable long-term structure that provides retirement incomes in a simple, affordable and fair manner. |
