FIRST EVER COMPREHENSIVE REPORT ON SUPER BALANCES
A report just released by ASFA - The Voice of Super gives for the first time a tangible and comprehensive picture of the level and diversity of superannuation account balances in Australia - and it's clear some sectors of the population, particularly women, are way behind.
Using newly available unit records from the Australian Bureau of Statistics 2003-04 Survey of Income and Housing, ASFA's Director of Research Ross Clare has compiled a comprehensive report - 'Are Retirement Savings on Track?' - on Australians' super balances.
"The picture that emerges is of considerable progress in spreading super to a larger proportion of the population and in growing super balances," said Ross Clare, ASFA's Director of Research.
"However, average balances are still relatively low, and there are a number of groups - such as women - who need further assistance and encouragement to save if they are to achieve even a modest standard of living in retirement."
The average balances achieved in 2004 were:
- $56,400 for men; and $23,900 for women
The average retirement payouts in 2004 were:
- $110,000 for men, and $37,000 for women
ASFA estimates that the average retirement payouts in 2006 are likely to have been:
- $130,000 for men, and $45,000 for women
Based on these figures, relatively few retirees (less than 20%) have or are likely to have lump sum super benefits that are above the soon-to-be-former tax free threshold ($135,590).
"Although the forthcoming abolition of tax on super benefits at age 60 is very welcome, it is not currently relevant to the majority of Australians with super. " said Mr Clare.
"The co-contribution delivers considerable potential benefits for the lower paid. Further strategies such as extending the super co-contribution are needed to help a greater proportion of people achieve a more adequate retirement income," said Philippa Smith, CEO of ASFA (The Association of Superannuation Funds of Australia).
In this year's Federal Budget, the government offered a one-off bonus by doubling the super co-contribution for those who contributed the previous year. If the government had decided to carry this forward as a permanent feature, it would significantly increase the retirement benefit for low income earners, particularly women because their lower average incomes make them more likely to qualify for it.
"In the following example, if the co-contribution was doubled permanently, an average earning woman would receive a retirement payout of $186,000, which is far closer to achieving adequacy," said Mr Clare.
The Westpac-ASFA Retirement Standard has found that to achieve a modest standard of living in retirement a single person would need to spend $18,375 a year. For a comfortable standard of living they would require $35,668 a year.
Retirement savings of over $100,000 are needed to achieve a modest lifestyle and over $260,000 is required for the comfortable lifestyle (assuming access to a full or part Age Pension).
Other findings in 'Are Retirement Savings on Track' included:
- 10% of individuals with super hold 60% of its assets.
- 70% of men and 90% of women currently have balances of less than $100,000
- 24.3% of the group surveyed reported having no super at all - such as low paid/casual workers, social security recipients, and those who have cashed out their super already.
"The compulsory super system (the Super Guarantee) commenced in 1992. As it matures, balances will steadily improve. However, most current and future retirees will need to rely on both their super and the Age Pension in their retirement," said Ms Smith.
'Are Retirement Savings on Track' can be found in the Reports section of this website.
ASFA will also be releasing a report on the adequacy of the Age Pension later this year.
Further information:
Ross Clare, ASFA Director of Research, on 02 9264 9300 or 0417 680 908
Philippa Smith, ASFA CEO on 02 9264 9300
Gillian Tatt, ASFA Public Affairs Manager on 02 9264 9300 or 0413 593 568