24 August 2023
Superannuation to raise living standards, lower future age pension cost burden
Australian retirees continue to face significant cost pressures on their household budgets as historically high consumer price inflation drives up the price of everyday items.
The Association of Superannuation Funds of Australia (ASFA) says the Government’s Intergenerational Report (IGR) highlights the crucial role played by Australia’s superannuation system in supporting the living standards of future generations of retirees and in easing the future cost burden of the Age Pension.
“Superannuation is essential for Australian retirees who will face higher costs in the coming decades,” said ASFA Deputy CEO, Glen McCrea.
“Along with containing government expenditure associated with an ageing population, superannuation will be an important source of financing for the investments needed to lift productivity in the Australian economy over the decades ahead.”
“Importantly, superannuation will be an important source of intergenerational fairness, ensuring younger generations do not face higher tax burdens to finance increasing expenditure on the Age Pension.”
Back in 2002 when the first IGR was published, expenditure on the Age Pension was projected to reach 4.6 per cent of GDP by 2041-42. That figure is now expected to drop to 2 per cent of GDP by 2062-63, a substantial contribution to the sustainability of the Budget.
“The projected expenditure on the Age Pension of just 2 per cent of GDP makes Australia’s the lowest among our OECD peers, at just a fraction of current and projected government expenditure on retirement income in the USA, UK, Japan and other European nations,” Mr McCrea concluded.
ASFA believes further improvements to superannuation policy settings are still needed to ensure that the greatest number of Australians possible can have a comfortable and dignified retirement.
Many young Australians need to catch up with their retirement savings after emptying their superannuation accounts through the COVID early release arrangements. ASFA has put forward proposals that would particularly assist young people and women more generally.
These include raising the upper income threshold for the payment of the Low- Income Superannuation Tax Offset (LISTO), SG being paid in regard to parental leave, and greater superannuation coverage of gig economy workers.
For further information, please contact:
Jacqui Maddock: 0451 949 300
ASFA is the peak policy, research and advocacy body for Australia’s superannuation industry. It is a not-for-profit, sector-neutral, and non-party political, national organisation. ASFA’s mission is to continuously improve the superannuation system, so all Australians can enjoy a comfortable and dignified retirement.