Superannuation is the critical savings that underwrites Australian retirements and provides a $2.3 trillion investment bank for infrastructure and other nation-building assets.
Super plays a crucial role in improving the living standards of Australians in retirement.
The age pension provides a buffer against poverty in retirement but the pension alone does not deliver the lifestyle in retirement that most Australians need or want.
In considering appropriate policy settings, such as what the rate of compulsory contributions should be, it is important to have a sound fact base to work from.
ASFA publishes an extensive amount of material about the superannuation industry, including well-sourced statistics and other facts.
The ASFA commitment to truth and accuracy is paramount in helping inform reasoned debate about super and retirement.
The simple statistical facts are:
- superannuation is the largest financial asset for the great bulk of Australians, apart from the family home
- around 90 per cent of households with a household head aged 15 to 64 have superannuation
- only 24 per cent of such households have direct shareholdings
- only 20 per cent have an investment property
- only six per cent have their own unincorporated business
- the principal source of income for 70 per cent of Australian retirees aged 45 years+ is currently the pension
- super is currently the principal source of income for 16 per cent of retirees
- Australians reaching the ASFA comfortable standard of living* in retirement will increase from about 20 to 40 per cent by 2040, based on current settings and including scheduled increases in Super Guarantee (SG) payments to 12 per cent by 2025
- achieving adequate incomes for Australians in retirement requires an increase in compulsory contributions to at least 12 per cent of wages.
There have been recent claims in the media related to superannuation and suggesting Australians have more non-super assets than they really do. Commentary around the need to raise the SG to 12 per cent has also been ill-informed.
Any claim that superannuation only makes a modest contribution to Australians’ savings, when you look at average asset holdings across wealth and income distributions, commits a statistical sleight of hand.
Only a minority of individuals or households have an investment property, a business or shares. It makes no sense to average such assets over a group including many individuals who do not hold such an asset.
Any claim that household effects such as furniture, whitegoods and electronic devices are a form of saving for retirement and will generate an income in retirement is nonsense.
Rather than being a source of income in retirement, household effects need to be repaired and replaced over time.
Another error that can and has been made when discussing superannuation is to look at data for households and attribute the asset holdings to a household head or to a couple heading up the household.
The car, personal effects and superannuation of an adult child still living with their parents are not available for the retirement needs of the parents.
The simple truth is that it does not make sense to average assets held by a relative few over everyone, or to treat contents of dwelling and motor cars as saving for retirement.
Australians need and deserve accurate information and statistics about super.
For more information go to www.superguru.com.au or talk to your super fund.
* The ASFA Retirement Standard benchmarks the annual budget needed by Australians to fund either a comfortable or modest standard of living in the post-work years. It is updated quarterly to reflect inflation, and provides detailed budgets of what singles and couples would need to spend to support their chosen lifestyle.
A comfortable retirement lifestyle enables an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as: household goods; private health insurance; a reasonable car; good clothes; a range of electronic equipment; and, domestic and occasionally international holiday travel.
A modest retirement lifestyle is considered better than the age pension, but still only able to afford fairly basic activities.
Both budgets assume retirees own their own home outright and are relatively healthy.
For further information, please contact:
Teresa Mullan, Media Manager, 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 people can live in retirement with increasing prosperity.