AustralianSuper’s submission to the retirement income review this week specifically pointed to this gap as a concern for the superannuation system.
The preservation age, which is when someone can access their super, is currently between 55 and 60 depending on date of birth. The pension age is 66 for those born from 1954 to June 1955, rising to 67 years for those born after 1957.
“[The] Indigenous population is more likely not to reach preservation age, so question whether the system is fit for purpose for this cohort,” AustralianSuper said.
Treasurer Josh Frydenberg last year ruled out raising the pension age to 70 as part of the first retirement income review since the 1990s. But reducing the superannuation age for specific groups of people is unlikely to be a popular proposal.
The Department of Prime Minister and Cabinet in a 2018 submission to the Banking Royal Commission said current legislation allows the early release of superannuation funds to pay for medical treatment and did not support changing the age requirements as it would run counter to the “universal aspect” of the superannuation system.
The AIST, which is part of the cross-industry Indigenous Superannuation Working Group, said that the retirement system was too often based on assessments about “full-time, male, continuously-employed, higher income earners”.
Indigenous Australians were much more likely to receive a disability support pension than the age pension but in the total population this was not the case, the AIST said, suggesting Indigenous people were more likely to become disabled before retirement.
“This has a significant effect on the relevance of preservation age for these members who are overwhelmingly more likely to take their accrued super under permanent incapacity and other early release provisions than at retirement age.”
The ACTU, which has pushed for a raft of changes including increasing the super guarantee for women, wants immediate reform to lower the age pension eligibility and preservation age for Aboriginal and Torres Strait Islanders.
The submission also recommends superannuation funds and relevant government services are offered in Indigenous languages and a reduction in the paperwork needed to prove ancestry.
Consulting firm PwC also flagged “unique challenges in retirement” for Aboriginal and Torres Strait islanders.
A spokesman for Minister for Indigenous Australians Ken Wyatt said that while the life expectancy gap needed to be considered there were “systemic and structural transformations required to achieve better life outcomes for Aboriginal and Torres Strait Islander people in older age”.
He said a government strategy to close the gap was focused on economic development to help intergenerational change for longer term wellbeing.
Jennifer Duke is an economics correspondent for The Sydney Morning Herald and The Age, based at Parliament House in Canberra.