Today’s mid-year economic update highlighted the strong headwinds we face and the impending impact of unemployment and the economic downturn on long-term retirement outcomes.
The upcoming release of the Retirement Income Review reinforces the need for the legislated increase in the compulsory superannuation guarantee to 12 per cent to shield Australia’s retirement savings from the shocks caused by the COVID-19 crisis.
The Association of Superannuation Funds of Australia (ASFA) acknowledged the extension of the Federal Government’s early release stimulus scheme but warned against the long-term impacts of drawing down private retirement savings, both on individuals and the broader economy.
ASFA CEO, Dr Martin Fahy, said: “These are anxious times and we face challenging economic headwinds. As the Treasurer outlined today, Australia remains in a relatively manageable position in terms of debt, compared with our OECD peers.
If low income earners and young people’s superannuation continues to be eroded by the early release stimulus scheme, we risk losing sight of superannuation’s intended purpose, which is to provide adequate income for Australians in retirement.”
Recent ASFA research, submitted to the Retirement Income Review, demonstrates that Australia’s compulsory superannuation system is delivering higher household savings and higher living standards for the broader population, and particularly low-income earners.
Key findings of ASFA’s research into compulsory superannuation include:
- compulsory super counter-acts peoples’ biases to under-save for retirement
- 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 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
- superannuation funds invest in asset classes crucial to Australia’s long-term productivity performance.
Download ASFA Research: The benefits of Australia’s compulsory superannuation system
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.