29 November 2023
Superannuation delivering for Australians, but challenges remain
A wide-ranging new research report released today by the Association of Superannuation Funds of Australia (ASFA) on superannuation account balances, indicates that superannuation is delivering substantial improvements in retirement income for Australians and that as the system matures there will be even greater benefits to come.
“ASFA projections indicate that as it matures, the superannuation system will play a crucial role in improving retirement living standards in Australia,” said ASFA Interim CEO, Leeanne Turner.
Currently around 30 per cent of couples and singles either reach or exceed the ASFA Comfortable Standard and by the year 2050 ASFA projections indicate that around 50 per cent of retiree households will be able to afford expenditure at the level of ASFA Comfortable or above.
The report also found that while the proportion of people aged over 65 with superannuation has increased in recent years, the great bulk of people die with little or no superannuation. Only 37 per cent of individuals aged 75 to 79 have any superannuation, while only 20 per cent of those aged 80 to 85 still have superannuation.
“Not having enough superannuation in retirement is a much greater challenge than the relatively few older individuals not spending all of their superannuation during their lifetimes,” said Ms Turner.
As well, there are still substantial challenges for younger Australians. COVID-19 early release payments will have a lasting impact on the retirement savings of many Millennials. For a person aged about 30 when they applied for COVID-19 early release, the impact on their final retirement superannuation balance in many cases will be over $43,000 in today’s dollars.
There also were significant increases in housing costs, with a 4.4 per cent increase in the quarter in council rates, and a 4.7 per cent increase in water and sewerage charges. Typically increases in these categories occur annually in the September quarter.
Other key findings include:
- The gender gap in superannuation has been narrowing, but there remains a 25 per cent gap in the median balance of women and men in the runup to retirement. Policy measures advocated by ASFA such as the Superannuation Guarantee (SG) on Paid Parental Leave (PPL), a superannuation baby bonus, and an increase in the upper threshold for LISTO aim to address this issue
- ASFA analysis of Census data suggests that currently each year around 45,000 Australians aged 60 to 64 retire, around 65,000 aged 65 to 69 retire and around 40,000 aged 70 to 74 retire.
- In 2021-22 (for funds with more than six members) there were around 1,370,000 persons who received regular income from account-based income streams. There were 99,000 persons receiving annuity payments (both term and lifetime) along with 159,000 persons receiving defined benefit pensions.
- The number of unjustified multiple superannuation accounts has substantially decreased in recent years with the number of unwanted or unnecessary accounts in the system in the order of 2 million to 2.5 million. “Stapling” of superannuation accounts to an individual when they change jobs is helping to control the creation of new multiple accounts but has no impact on the existing stock of multiple accounts.
- ATO sample file data indicates that for those with more than $3 million in superannuation as at June 2021 around 60 per cent were male and around 85 per cent were aged 60 and over. Around one-third had an investment property. Less than 1 per cent recorded farm income in their tax return.
For further information, please contact:
ASFA Media team: 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.