27 June 2020
Compulsory superannuation delivers for Australian households
New research from The Association of Superannuation Funds of Australia (ASFA), has found the compulsory superannuation system has delivered higher household savings and higher living standards for the broader Australian population.
ASFA CEO, Dr Martin Fahy, said: “The strength of Australia’s superannuation system is evident from the important role super is playing to help provide both short term financial relief to people hardest hit by the COVID-19 crisis and investment capital critical to the economic recovery.”
ASFA’s examination of Australia’s compulsory superannuation system also demonstrates that the long-term boost to households’ savings and retirement outcomes are of extraordinary benefit to low-income earners, in particular.
“Australians value a fair go for all and we don’t leave people behind. The research shows that superannuation shares the benefits of long-term wealth accumulation across our society and gives everyone the opportunity to retire with dignity.
The system delivers tangible benefits to households across the income spectrum. For many, it is the primary means to participate in our national economic success through asset ownership and diversification.
The current crisis has highlighted the immeasurable contribution of front-line workers within our community. Through compulsory superannuation, all Australians share in the prosperity that is built on the backbone of their hard work and sacrifice. This must never be the preserve of the wealthy elite.”
ASFA considers the legislated increase in the Superannuation Guarantee (SG) rate to 12 per cent would see half of all Australians achieve a self-funded retirement by 2050 and underpin Australia’s fiscal sustainability by diminishing reliance on the age pension in the context of an ageing population.
Key findings of ASFA’s research into compulsory superannuation include:
- prior to the introduction of the SG regime, low income households had negligible assets, including superannuation
- Australian households now have $500 billion in savings that they otherwise would not have saved
- of that, around $35 billion is additional savings of workers in the bottom 20 per cent by income
- compulsory superannuation has unambiguously improved the asset diversification of Australian households’ balance sheets, particularly for low income earners
- compulsory superannuation has helped make Australian households among the wealthiest, on average, in the group of advanced economies, and helped make wealth inequality in Australia among the lowest
- in the context of an ageing population, compulsory superannuation improves the sustainability of the Age Pension and takes pressure off future federal government budgets.
ASFA’s research will be provided as a supplementary submission to the Government’s Retirement Income Review.
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.