Super savings will continue to provide ballast to Australia’s economy

A report commissioned by the Association of Superannuation Funds of Australia (ASFA) released today confirms that the super system is able to deliver world class retirement incomes while continuing to provide stability to the economy.

Prepared by Deloitte Access Economics, the report will provide comfort to the community and policy makers in a number of ways. In particular, the report:

• Confirms that the way the pool of superannuation money is invested today is on track to deliver on both the expectations of retirees and the needs of the Australian economy.
• Found the growth of the superannuation system should not compromise the stability of the financial system, even as the pool of funds grows.
• Suggests measures that will enable superannuation trustees to adjust their investment approach to address the demographic shift of an ageing population and the structural shift of people drawing down on their savings to fund their retirement.

ASFA CEO Ms Pauline Vamos says the super pool provided ballast for the Australian economy during the GFC, however this now needs to be repositioned so that the Australian economic ship can remain steady.

“The $1.5 trillion pool of superannuation is growing rapidly, but its inherent flexibility as confirmed by the report means it poses no real threat to the stability of the financial system and in fact may actually help drive economic growth in Australia now and for decades to come,” says Ms Vamos.

The report also found that as more and more Australians move into the retirement phase, super funds will need to adapt their business models to respond to these changes. This means altering investment strategies to ensure funds have appropriate assets to provide for retirees drawing an income stream.

“For many years the majority of super accounts have been in the accumulation phase, so super funds have tailored their investment strategies accordingly. However, as the population ages and more and more people move into retirement, the focus will need to shift to acquiring assets which deliver the funds necessary to provide for members drawing an income stream,” says Ms Vamos.

“However, we must be careful that we don’t look to superannuation as a tool to ‘plug holes’ in the financial system, directing superannuation capital towards ventures which may not deliver the best outcomes for fund members.”

Ms Vamos says the research once again highlights the need for the superannuation industry and the broader Australian community to consider how our super system should evolve to accommodate the changing nature of Australia’s population.

“Just as investment strategies will need to change over time to accommodate Australia’s demographic changes, so too will the policy settings applied to super. This is why last month ASFA launched a White Paper for community consultation on how we can evolve the design of the system.

“Both that White Paper and the report released today, well and truly start a much needed conversation by bringing the design and investment sides of the system together,” Ms Vamos concluded.

A copy of the full report can be downloaded here.

For further details regarding ASFA’s White Paper and community consultation or to make a submission, visit www.superannuation.asn.au/vision-for-super/.

For further information, please contact:

Lisa Chikarovski, 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 whose aim is to advance effective retirement outcomes for members of funds through research, advocacy and the development of policy and industry best practice.