Australia’s retirement system under the scanner with a new Senate Inquiry
A new Senate Inquiry, with a focus to improve and future-proof Australia’s retirement system, has been announced. One of the main areas of focus for this Inquiry is to determine what merits, if any, there might be in developing a bespoke insurance product for the aged care sector.
According to the 2023 Intergenerational Report, over the next forty years, aged care ranks as one of the top five categories which will take up Australian Government spending as a share of the country’s GDP. Australian Government payments for health care, aged care and the NDIS are projected to increase as a share of GDP from 6.2% in 2022–23 to 10.7% in 2062–63.
Liberal Senator and the Chair of the Senate Economics References Committee Andrew Bragg said, “The 2023 Intergenerational Report projects a 70% increase in per capita expenditure on aged care over the next 40 years. Our Inquiry will examine the merits of an aged care insurance product to futureproof our aged care system.”
“In addition, the Inquiry will examine how to improve customer experiences and choice in insurance.”
Back in June, in her National Press Club Address, the Hon Anika Wells, the Minister for Aged Care, announced a newly established Aged Care Taskforce, which would explore how the federal government could rise to the aged care funding challenge, one of the key financial pressures on the federal budget year on year.
“Within a decade, our nation will have, for the first time in history, more people aged over 65 than under 18,” Minister Wells said in her address.
“And our workforce will be ageing, with people aged 15 to 64 years predicted to decline as a proportion of total population.
“We have already heard the next generation of people entering aged care are going to want a different model and standard of care than those before them.”
The Minister outlined that the purpose of the Aged Care Taskforce was to find a sustainable model of funding aged care that would be beneficial for future generations.
“The Taskforce will help our seismic shifts from provider focused to person focused, and funding focused to care focused,” she said.
Since its inception, the Taskforce has met thrice this year and one of the key things it has discussed is whether there is a need for an insurance product that specifically targets the aged care sector.
This brings us to the Senate Inquiry, with one of its major focus areas being the role insurance and insurance products can play in helping futureproof Australia’s retirement system.
As outlined in the Terms of Reference, there are certain key areas of the Inquiry that will be relevant to brokers. These include, but are not limited to:
regulatory and tax impediments to innovation and uptake of insurance products in retirement
the interaction of health insurance, life insurance, general insurance, and social security supports to retirement outcomes
policy options to support greater choice and quality of life in the retirement income system
the impact of climate change on insurance premium affordability and accessibility
the impact of climate change on the value of assets.
You can read more about the full Terms of Reference here.
The Committee will be receiving submissions until 23 February 2024. The Inquiry is expected to submit its findings by 30 June 2024.