Retirement Income Review chairman says it’s ‘inefficient’ to fund aged care through superannuation

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Retirement Income Review chairman and former chief of staff to Peter Costello, Mike Callaghan (pictured), has rubbished the idea that aged care could be funded through a rise in superannuation.

Mr Callaghan said ‘ring-fencing’ a legislated superannuation increase to fund aged care would be ‘inefficient’, The Sydney Morning Herald reported.

The proposed increase comes after the Retirement Income Review recommended the Federal Government delivers on the five legislated increases of 0.5 per cent of salary, starting in the new financial year until 2025, when a full rise of 12% is completed.

But Mr Callaghan has opposed a backbench call for the increase to fund aged care into the future, arguing his review found the current rate would be enough if “assets were used” better.

It was also found that 1.2 million people were awarded aged care services in 2017/18, but only 7% of those more than a million recipients were actually in an aged care home.

“The concept of putting aside part of your superannuation balance when you may not need it is like self-insuring for something you may not need,” Mr Callaghan told the publication.

“It would be an inefficient insurance arrangement … when you only have a small proportion of people who need it.”

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