ASFA has noted comments by Senator Andrew Bragg on ABC Radio National this morning.
ASFA CEO Mary Delahunty said most Australians would believe the objective evidence, which shows that superannuation has been a hugely positive policy for Australians’ retirement security, living standards in retirement, and the public purse.
“Super has meant that even as our population ages, the government’s Age Pension bill is going down instead of up. OECD projections have Australia at the lowest public pension spending in the OECD by the mid-2030s.
“Super has also meant that reliance on the Age Pension has fallen, with 12 per cent fewer over-65s receiving a part or full Age Pension today than in 2012. This will keep falling as we see the effects of higher Super Guarantees coming in.
“A lower reliance on the Age Pension is a massive public policy success. The full Age Pension puts people just below the poverty line if it’s their only source of income. As super has matured, retiree poverty has declined. Relative poverty levels for those over 65 declined from about 30% to 11% between 2001 and 2022,” Ms Delahunty said.
What the facts show
Australia’s public pension spending is 2.3 per cent of GDP, down from 2.8 per cent in 1994-95 despite the population’s aging over that period. The OECD average is around 9 per cent, and Italy and Greece spend roughly 16 per cent.
Treasury projects Age Pension spending will fall from 2.3 to 2.0 per cent of GDP over the next 40 years, even as the population aged 65 and over is projected to grow substantially. Average pension spending by other OECD countries, by contrast, is expected to grow.
The proportion of Australians aged 65 to 69 receiving the Age Pension has declined 34 per cent since 2012. The proportion of the population aged 65 and over receiving the Age Pension fell by 12 per cent over the same period. At the same time, the retirement-age population grew by almost 50 per cent.
Compulsory super has generated more than $1 trillion in household savings that would not otherwise exist, lifting national saving by around 3 per cent of GDP on Treasury’s estimate and reducing Australia’s reliance on foreign capital. Around half of the system’s $4.4 trillion is invested locally, including roughly $118 billion in Australian infrastructure.
Super has contributed to the nation’s productivity growth while Australians have reaped the benefits that come from owning a share of the economy through their investment. Super investment has lifted productivity by around 2 per cent, with the average full-time worker now reaping a productivity dividend of around $2,500 in pre-tax wages every year, as well as enjoying average returns on their super investments of over 9 per cent over the last four years.
Most of the gains are still ahead
“The Superannuation Guarantee only reached 12 per cent in July last year. Almost nobody retiring today has had a full working life at that rate. Judging the system on the balances of people who spent most of their careers on 9 per cent or less tells you very little about the system we have now,” Ms Delahunty said.
“ASFA’s modelling shows a 30-year-old on the median wage with $30,000 in super today will retire with $610,000. The full extent of budget savings that come with that much higher level of financial independence in retirement are still ahead of us,” Ms Delahunty said.
Members of the media may contact:
Scott Roberts
Media and Content Lead
sroberts@superannuation.asn.au
0451 949 300
About ASFA
ASFA is the peak policy, research and advocacy body for Australia’s superannuation industry, and the only industry body that represents all parts of the APRA-regulated system.
Our more than 100 members include retail, industry, corporate and public sector funds and their service providers. For over sixty years, ASFA has been the voice of super, advocating for a dignified retirement for all Australians. Through research, advocacy and collaboration, ASFA promotes efficiency, sustainability and trust in Australia’s world-class retirement income system.