Streamlining the process for Indigenous Australians facing hardship to access their superannuation early and with fewer penalties may help to improve their retirement outcomes, a new report has found.

The report, released by the Bankwest Curtin Economics Centre (BCEC) and UniSuper, assesses the appropriateness of the Superannuation system for Indigenous Australians and outlines a set of recommendations that could help to improve the support provided to Indigenous superannuation policy holders making the transition into retirement.

The report draws upon a range of data sources to model the accumulation of superannuation balances over the life-course for Indigenous and non-Indigenous Australians, as well as responses and feedback from focus groups held with Indigenous superannuation fund members.

Lead report author Professor Michael Dockery from BCEC said the report highlights the importance of creating a more culturally-aligned superannuation system that provides greater support to Indigenous Australians who may be experiencing significant disadvantage or hardship.

“When engaging with superannuation funds, Indigenous Australians face challenges around proof of identity, financial literacy, access to services and consolidating multiple accounts,” Professor Dockery said.

“To improve service delivery and access for Indigenous clients, we recommend the establishment of a specialised Indigenous support and advocacy unit to assist Indigenous people with issues and inquiries relating to their superannuation.”

The report also found that the average Indigenous man will accumulate a superannuation balance of $308,000 by the age of 65, compared to $483,000 for non-Indigenous men; while Indigenous women are likely to receive $205,000 compared to $313,000 for non-Indigenous women.

Indigenous Australians face a lower life expectancy compared to the non-Indigenous population. This has been acknowledged through existing government policy that gives access to aged care services at the age of 50 years rather than 65 years.

Professor Dockery said not being able to access superannuation early when faced with ongoing chronic health conditions or when needing financial support was one of the key issues raised by Indigenous focus group participants.

“There was clear agreement among participants that the superannuation preservation age should be lower for Aboriginal and Torres Strait Islander Australians due to lower life expectancy,” Professor Dockery said.

Professor Dockery explained introducing fewer tax penalties as well as a lower preservation age for Indigenous Australians so they can access their superannuation earlier if they choose to, would be beneficial.

“The current system benefits those who are employed for a long period of time, those who have higher earnings and home owners. Further, unconditional access to superannuation is not available until an individual reaches 65 years of age. This creates a huge disadvantage to Indigenous Australians who experience lower life expectancy, lower home ownership rates and lower labour force attachment and earnings over their lifetime,” Professor Dockery said.

“Removing these penalties and giving Indigenous Australians early access to their superannuation funds would help to improve retirement outcomes for the Indigenous population and create a fairer, more balanced system for all.”

Dr Julie Owen from Curtin’s Centre for Aboriginal Studies said the new report provides important insights into how the system can support Indigenous Australians.

“As we have seen during COVID-19, many superannuation funds have allowed struggling Australians to access some of their superannuation early, without needing to pay tax penalties on the money withdrawn,” Dr Owen said.

“If these types of restrictions can be relaxed during an ongoing pandemic, then we should be able to make similar efforts given the circumstances facing so many Indigenous Australians.”

The full report and the list of recommendations can be found here.


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