Superannuation and the age pension are basically a “universal” model.
You retire at 55, or work till 65, and then you dip in. But COVID-19 saw three million Australians take out their super much earlier than that, due to hardship. Others can access super early to pay for medical treatment or a funeral or to stop a house being sold, assuming they can prove hardship or compassionate grounds.
So if one-size-doesn't-fit-all, why can’t we change the rules to allow Aboriginal and Torres Strait Islander people access to retirement money earlier, given their shorter life expectancy?
Why do we need this?
If a non-Indigenous man born in 2017 retires at 67, for example, they’ll have on average 13 years in retirement before dying at age 80.
But an Indigenous man born and retiring at the same time will only have 4.5 years in retirement, because on average they die nearly ten years sooner.
And that’s not all...
“Overall we have 23 per cent less earning capacity and we retire with 27 per cent less earnings,” said Terry Mason, from the Aboriginal and Torres Strait Islander policy committee at the National Tertiary Education Union.
He’s been pushing for early voluntary access to super for 20 years, because First Nations People are retiring with less money than the wider population, with far less time to reap the benefits.
In fact, some don’t get to at all.
“In other words, you work all your life. You pass away early, you don't have the dignity of enjoying some retirement time with your family, but you’ve paid for your own funeral,” Mason told The Feed.
When you hear something like that, it’s hard to argue against voluntary early access for Indigenous people. But are we missing the bigger picture?
What about closing the gap?
Ian Hamm, is chairperson of the not-for-profit financial literacy group First Nations Foundation. He’s helped people track down lost super, including one Aboriginal man in his 70s who was unaware he had accumulated nearly $750,000 from working at a post office since he was a teen.
Ian Hamm worries granting early super access would mean we’re giving up.
“If I say to somebody in their mid twenties now your life expectancy is going to be no different to mine, and I'm 30 years older than you isn't that really admitting defeat on the most fundamental of closing the gaps that is simply how long we live?” he said.
Truth is, we’ve tried and failed for years to address that. One analysis shows the federal government spent more than $130 billion on Close the Gap programs between 2008 and 2016. And it’s promised more than four billion dollars towards Indigenous health initiatives over the next four years.
“I think it's less of admitting defeat and [more of] accepting what's real,” Terry Mason said.
He says he doesn’t have much hope for the pension age being lowered, given the government floated raising it, but Terry says that COVID-19 super drawdowns have proven policy change is possible there.
Is it fair?
If First Nations People can access super early due to their shorter life expectancy, what does that mean for other groups? Men on average die earlier than women, should they get it? People in remote areas also have shorter life expectancies, should they be considered too?
“If you could find another identifiable group that on average passes away as early as Aboriginal and Torres Strait Islander people do, I'd probably support them in putting forward a claim for voluntary early access. They deserve the precedent if we create it,” Terry Mason said.
“But I doubt you'll find another group that is in the circumstance we’re in,” he said.
He says for those who choose to use it, a voluntary super access scheme would acknowledge their hardship, instead of making them prove it.
“I can't work to the extended retirement age, I then need to go through the indignity of seeing multiple doctors and filling out multiple forms and having multiple interviews to put in a hardship case, when the reality is that I'm needing to claim this earlier because of an inherited history, not anything I've done to me,” he said.
Ian Hamm from First Nations Foundation says he can see some benefit for those approaching retirement now, but he says more thought and discussion is needed.
“Does [giving early super access] mean that Aboriginal access to insurance, for example, will be at higher premiums because we are regarded as a higher risk?,” he said.
Terry Mason says there hasn't been widespread consultation “and it really needs to start happening.”
The Verdict
Unions and rights groups have been calling for this for two decades. Changing retirement rules is not an excuse to admit defeat on closing the gap in life expectancy.
But until we do close that gap, a voluntary scheme that’s focused on equity, dignity and quality of life should be available.
