AUSTRALIA - Compulsory government annuities envisaged by the interim report of the Henry review could be harmful to the ageing population, the Investment and Financial Services Association (IFSA) warned.
Citing a report by Towers Watson, IFSA chief executive John Brodgen said the consultant's research demonstrated the option considered by the Henry review to manage the cost of an ageing population may be "significantly unfair", because it could "result in lower paid workers subsidising wealthier Australians".
He said: "A compulsory government annuities scheme would require Australians to hand over all or part of their superannuation savings to the Government when they retire. The Government would then determine a permissible annual draw down."
However, Brodgen added: "According to the Australian Bureau of Statistics, manual labourers do not live as long as office workers. A Government run annuities scheme by its nature rewards those who live longer at the expense of those who have a shorter life."
The Henry review is an ongoing review of the country's tax system launched in May last year. Its results are expected to be released imminently.
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