Adequacy and the Australian superannuation system
We must do better for retiring Australians
Unless Australians work longer, or contribute more, their superannuation accumulation will likely be inadequate to support them in retirement.
A new report from Deloitte Actuaries & Consultants looks at what the superannuation industry, Government and members can do to secure a better financial future for retiring Australians.
From government we need policy settings that build trust, foster greater efficiency and competition, and sensibly apply concessions across the working lifetime of individuals.
Industry needs to develop products that assist individuals better manage investment, inflation and longevity risk, and provide members with the knowledge to make informed decisions. And individual Australians must become involved in their superannuation to get the most out of the system and better prepare themselves for their retirement.
The bottom line according to the Deloitte Point of View - Adequacy and the Australian Superannuation System is that if we leave the system in its current form, members will need to contribute more - much more - to achieve even a modest level of financial security in retirement.
Deloitte calculates that each person would need to contribute an extra 5.5%-7.5% of salary to superannuation each year of their working lifetime, in addition to the 12% superannuation guarantee charge, to self-finance a comfortable retirement, and not need to rely on a government financed pension with its increasingly restrictive eligibility conditions.
In 2013 Deloitte released its biennial Dynamics of Superannuation projections, which showed that the Australian system continues to grow and is predicted to reach close to $8 trillion in 20 years’ time. Despite this growth, its accumulated funds will still fall far short of providing a comfortable retirement for most retirees.