The Association of Superannuation Funds of Australia (ASFA) has released new research that considered the legislated increase of the superannuation guarantee (SG) rate to 12 per cent “would see half of all Australians achieve a self-funded retirement by 2050”.
According to ASFA, as the system matures, a larger proportion of retirees will reach the ASFA comfortable retirement standard benchmark – which currently sits at around $44,200 per year for a single person and around $62,400 per year for couples.
It estimates that around 50 per cent of Australians will reach this result.
On a macroeconomic scale, this would mean national fiscal sustainability would be improved – through less reliance on the Age Pension despite Australia’s ageing population.
ASFA explained that over time, the proportion of retirees that will be eligible for either a full or part Age Pension “is expected to decline”.
In effect, this means that while more people will be drawing on a pension by virtue of the ageing population, they will be drawing on lesser amounts, thanks to superannuation.
“This will counter the pressure of an ageing population on future Age Pension expenditure by government,” it continued.
Assuming that the legislated increase to 12 per cent does occur, ASFA has projected that expenditure on the Age Pension will fall from 2.9 per cent to 2.6 per cent of GDP over the period to 2054-55.
This puts Australia in a much better position than many other advanced economies, the organisation noted.
OECD expenditure on public pensions averages 8.8 per cent of GDP in 2020.
This is projected to increase to 9.4 per cent by 2050.
According to ASFA, some European countries are already spending four times the amount Australia does on pension systems, with these numbers expected to increase even further.
Did you enjoy this article? You may also be interested in:
- How compulsory super champions low-income earners
- Industry super slams government over guarantee freeze
- How to rebuild your super balance after COVID-19
About the author
