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Tighten pension rules, says FSC chief

The financial services industry has called for the federal government to consider tightening pension eligibility rules and lifting the minimum age people can access their superannuation.

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Newly installed Financial Services Council chief executive Sally Loane says the perception many people have of superannuation needs to change, saying it was to fund retirements, not be a top-up to a government pension.

She said lifting the age at which Australians could access their super to 65 would keep them working longer and ensure they had greater savings in retirement.

Tightening eligibility rules would also ensure pensions go to those who need them most.

“The income and assets tests for the age pension should be reviewed to ensure it is not too generous for those people who can fund their own retirement, and not miserly for those who cannot,” Ms Loane said in her first speech since joining the FSC.

“Eligibility rules are too loose. Is it fair or sustainable for a couple who own their own home, who hold an additional $1 million in assets and can receive an income of up to $60,000 per year to still be eligible for a part-pension?”

Ms Loane said 56 per cent of Australians expect to take an aged pension upon retirement, though the figure was considerably lower for people in their 30s and 40s.

She also called for a greater role for private sector life insurance, to take pressure off the government’s National Disability Insurance Scheme.

“Income protection insurance that protects against the economic risks of disability is an underused policy device in Australia, which could reduce Commonwealth budget pressure arising from increasing disability-related welfare costs,” she said.

Increasing the level of private disability coverage, she said, could save the government $8.5 billion, according to modelling commissioned by the FSC.