Media Release

No more meddling with super and Age Pension settings says ASFA – new data show reforms are working

2 February 2018

No more meddling with super and Age Pension settings says ASFA – new data show reforms are working

The Association of Superannuation Funds of Australia (ASFA) today released new data showing reforms to superannuation and the retirement funding system were working but needed to be bedded down. Stability needs to be achieved in order to maintain confidence in the system.

ASFA CEO Dr Martin Fahy said the Association’s Pre-Budget Submission analysis showed a substantial and positive impact from recent reforms, in terms of a reduction in government expenditures and increasing tax revenue.

“The Age Pension assets test changes that took effect from 1 January 2017 are helping contain future growth in Age Pension expenditures,” he said.

“Superannuation tax changes have substantially reduced the tax assistance flowing to upper income earners, plus the overall amount of tax concession for super contributions has been reduced by around $1.25 billion a year.”

“In addition, there is a further $1.1 billion a year in greater tax revenue in regard to superannuation investment earnings flowing from the cap on balances in pension phase and changes to the Transition to Retirement pension arrangements. These changes have impacted most on upper income earners.

The number of Age Pension recipients fell from 2,570,072 in December 2016 to 2,494,060 in March 2017, a fall of 3 per cent.

The number of full rate age pensioners rose marginally, from 1, 515,411 to 1,548,590, a rise of around two per cent. However, the total number of Age Pension recipients has continued to fall, with 2,489,591 in total in September 2017.

Total expenditure on the Age Pension in 2017-18 is expected to be $45.4 billion, up marginally from $44.5 billion in 2016-17.

In ASFA’s view, the changes made to the Age Pension were substantial and appear to make the Age Pension fiscally sustainable for Australian governments in the years ahead, while not leaving the great bulk of retirees substantially worse off.

“This will be reinforced by rising superannuation account balances at retirement as the compulsory system matures,” Dr Fahy said.

“However, any further tightening of either the asset or income test could leave many Australians in retirement worse off.”

Dr Fahy said reliance on the Age Pension would decrease further as superannuation balances increase, reinforced by the tighter assets test for the Age Pension and due to the continuing trend for people to remain in paid work after age 65.

“Super is working and will do more of the heavy lifting to deliver retirement outcomes into the future,” he said.

ASFA projections indicate that in 2025, around 20 per cent of people aged 67 will still be in paid employment with a further 40 per cent or so self-funded, or at least not eligible for the Age Pension.

Currently, around 70 per cent of people aged more than 65 receive either a full or part Age Pension. Of those, around 60 per cent are currently on the full Age Pension.

ASFA expects only around 30 per cent of Australians aged more than 65 will be on the full Age Pension by 2025 and by 2055; it could be down to 25 per cent or less.

Dr Fahy said super tax concession changes had decreased the proportion of the total concession for contributions going to those on the top income tax rate, from 13.3 per cent to 10.8 per cent.

The proportion of the concessions in regard to contributions going to those on $37,001 to $80,000 increased from 34.7 per cent to 36.9 per cent, while the proportion going to people on $18,201 to $37,000 increased from 11.9 per cent to 12.4 per cent.

Changes to the level of tax concessions for investment earnings in super accounts, including changes to Transition to Retirement pension arrangements, a tighter cap on non-concessional contributions and a $1.6 million transfer balance cap, have saved the budget a further $1.1 billion a year, with most of the impact on taxpayers in the top two income brackets.

All up, the May 2016 budget changes have reduced the overall amount of tax concession for contributions by around $2.35 billion a year.

“ASFA believes tax and Age Pension settings are working and now is the time for consolidation,” Dr Fahy said.

For further information, please contact:

Teresa Mullan, Media Manager, 0451 949 300.

About ASFA

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, which aims to advance effective retirement outcomes for members of funds through research, advocacy and the development of policy and industry best practice.

Amy C. Edmondson

Novartis Professor of Leadership and Management, Harvard Business School

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Keynote 8 – Navigating the energy transition: opportunities, investor strategies and policy needs

Amy C. Edmondson is the Novartis Professor of Leadership and Management at the Harvard Business School, a chair established to support the study of human interactions that lead to the creation of successful enterprises that contribute to the betterment of society.

Edmondson has been recognized by the biannual Thinkers50 global ranking of management thinkers since 2011, and most recently was ranked #1 in 2021 and 2023; she also received that organization’s Breakthrough Idea Award in 2019, and Talent Award in 2017.  She studies teaming, psychological safety, and organisational learning, and her articles have been published in numerous academic and management outlets, including Administrative Science Quarterly, Academy of Management Journal, Harvard Business Review and California Management Review. Her 2019 book, The Fearless Organization: Creating Psychological Safety in the Workplace for Learning, Innovation and Growth (Wiley), has been translated into 15 languages. Her prior books – Teaming: How organizations learn, innovate and compete in the knowledge economy (Jossey-Bass, 2012), Teaming to Innovate (Jossey-Bass, 2013) and Extreme Teaming (Emerald, 2017) – explore teamwork in dynamic organisational environments. In Building the future: Big teaming for audacious innovation (Berrett-Koehler, 2016), she examines the challenges and opportunities of teaming across industries to build smart cities. 

Edmondson’s latest book, Right Kind of Wrong (Atria), builds on her prior work on psychological safety and teaming to provide a framework for thinking about, discussing, and practicing the science of failing well. First published in the US and the UK in September, 2023, the book is due to be translated into 24 additional languages, and was selected for the Financial Times and Schroders Best Business Book of the Year award.

Before her academic career, she was Director of Research at Pecos River Learning Centers, where she worked on transformational change in large companies. In the early 1980s, she worked as Chief Engineer for architect/inventor Buckminster Fuller, and her book A Fuller Explanation: The Synergetic Geometry of R. Buckminster Fuller (Birkauser Boston, 1987) clarifies Fuller’s mathematical contributions for a non-technical audience. Edmondson received her PhD in organisational behavior, AM in psychology, and AB in engineering and design from Harvard University.

 

Daniel Mulino MP

Assistant Treasurer and Minister for Financial Services

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Born in Brindisi, Italy, Daniel was a young child when he moved with his family to Australia. He grew up in Canberra and completed his first degrees – arts and law – at the ANU. He then completed a Master of Economics (University of Sydney) and a PhD in economics from Yale.

He lectured at Monash University, was an economic adviser in the Gillard government and was a Victorian MP from 2014 to 2018. As Parliamentary Secretary to the Treasurer of Victoria, Daniel helped deliver major infrastructure projects and developed innovative financing structures for community projects.

In 2018 he was preselected for the new federal seat of Fraser and became its first MP at the 2019 election, re-elected in 2022 and 2025. From 2022 to 2025, Daniel was chair of the House of Representatives’ Standing Economics Committee in which he chaired inquiries; economic dynamism, competition and business formation and insurers’ responses to 2022 major floods claims.

In 2025, he became the Assistant Treasurer and Minister for Financial Services.

In August 2022, Daniel published ‘Safety Net: The Future of Welfare in Australia’, which aims to explore the ways in which an insurance approach can improve the effectiveness of government service delivery.