Summary

8.1 Superannuation laws contain age-based rules regarding the accumulation of, and access to, superannuation. This chapter considers whether the age-based rules amount to limitations or barriers to mature age workforce participation.

8.2 The ALRC has not found specific evidence that the age limits on contributions create barriers to workforce participation. Accordingly, no recommendations regarding the removal of the age limits have been made. However, concerns have been raised about the work test imposed on people aged 65 years and over if they wish to contribute to superannuation. It is not clear that the work test is meeting its policy objective and the ALRC recommends that the Government review the test.

8.3 There is evidence that age-based rules regarding withdrawals from superannuation accounts have a significant impact on mature age workforce participation. Access to superannuation funds makes retirement possible, or at least more attractive, and increasing access ages is likely to increase older people’s workforce participation rates.

8.4 The Terms of Reference for this Inquiry direct the ALRC to consider legislation that imposes limitations or barriers that could discourage older people from working. The ALRC considers that these terms require the identification of disincentives to participation and incentives to leave the workforce.^[1] The ALRC has also identified six framing principles for the Inquiry: participation; independence, self-agency; system stability; system coherence; and fairness.^[2]

8.5 Access to superannuation may amount to an incentive to leave the workforce. However, it is also an earned benefit and a statutory right. Delaying access to superannuation may delay retirement and compel workforce participation. Such an outcome would conflict with the framing principles for this Inquiry, particularly independence and self-agency. Accordingly, the ALRC has not recommended changes to access rules.

8.6 The relationship between access to superannuation and older people’s workforce participation is of significant public interest. For this reason, this chapter reviews the issue and reports on the submissions received on this topic. In particular, the arguments made both for and against changing access rules are examined. Arguments for increasing access ages are concerned with improving the adequacy and sustainability of the superannuation system. They are also concerned with the economic benefits that would accrue if mature age workforce participation increased. If a recommendation to increase access ages is to be made, this should occur after an inquiry that fully considers all of these issues.