Retirement Income Review - Scope Creep?

29 Nov 2019

Martin Heffron

Executive Director

The Retirement Income Review’s Consultation Paper was published on time last week. Given the time pressures, this was a major achievement so congratulations to the whole team involved.

The approach taken by the paper is to re-iterate the Review’s terms of reference, summarise the way in which key aspects of our current retirement system operates and then ask a series of questions the Review would like help with.

My initial impression from the nature of the questions is that the Review is taking on far more than it was specifically tasked with considering. 

In some respects, this will let government off the hook as the Review takes the heat for answering questions on adequacy, the balance between the state and individuals on securing or providing for their own retirement incomes etc.

The terms of reference make it clear that the work of the Review is to “establish a fact base” that presumably can be used to support future policy development. However, the paper suggests the Review will delve into far more subjective and challenging areas than simply establishing facts. I would argue that 15 of the 26 consultation questions at the back of the Paper have nothing to do with the establishment of facts. For example, in the Purpose of the System section, the Review asks:

What are the respective roles of the Government, the private sector, and individuals in enabling older Australians to achieve adequate retirement income?

Aside from the fact that what constitutes an adequate retirement income hasn’t yet been determined (which makes answering this question rather difficult) this is either a philosophical or political question. There is no objectively correct response. Facts don’t come into it.

I have been asking myself why the Review has taken this approach and concluded that the complete lack of context within our retirement income system makes it almost inevitable that anyone considering our system properly must first try to establish some. We currently live in a country where the following questions are moot:

  • What is the purpose of our retirement income system?
  • What is the purpose of each of the three pillars?
  • To what extent should the state take responsibility for securing its citizens’ retirement incomes?
  • What is an adequate retirement income?

These are all big, unanswered questions that deserve broad community level answers. Given the vacuum created by those within the Australian community that should be answering them, the Review has stepped up to the plate and looks like it is going to give most of them a go.

I congratulate them on their courage.