28 June 2021
IGR predicts superannuation to do the heavy lifting in the face of burgeoning health and aged care costs
The Government’s Intergenerational Report (IGR) published today, highlights the increasingly important role of Australia’s superannuation system in supporting the living standards of future generations of retirees.
With the report projecting government expenditure on health and aged care to increase from a combined 5.3 per cent of GDP in 2019-20 to 8.3 per cent in 2060-61, Australians will be looking to their superannuation to do the heavy lifting.
“This report highlights the importance of superannuation for Australian retirees who face higher medical and aged care costs in the coming decades,” said ASFA CEO, Dr Martin Fahy.
The IGR projects that over the next four decades the proportion of the population aged 65 and over will rise – from 16 per cent in 2019-20 to 23 per cent by 2060-61. The number of Australians aged 65 and over is projected to double over this period.
“In the 1970s Australia counted seven workers for every retiree. That’s set to drop to less than three workers per retiree by 2060.”
The report highlights that with the Superannuation Guarantee (SG) going to 12 per cent, and more workers contributing to super for longer, the median superannuation balance at retirement will increase from around $125,000 at present to over $460,000 by 2060.
“With more Australian retirees having higher super balances, the proportion of retirees reliant on the Age Pension will decline and ASFA expects half of all Australians to be self-funded in their retirement by 2050.
“Our strong superannuation system will allow Australia to lower the burden of the Age Pension from the current 2.7 percent of GDP to 2.1 per cent in 2060-61 making it the lowest among our OECD peers,” Dr Fahy concluded.
Australia compares favourably to the OECD countries, where expenditure on public pensions averages 8.8 per cent of GDP, and is projected to increase to 9.4 per cent by 2050.
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.