Climate change will take tens of thousands of dollars away from today’s youth, as the world grapples with employment issues and natural disasters, new research has warned.
The study, from Actuaries Institute, has indicated that climate change could result in lower superannuation contributions due to an increase in underemployment and unemployment as nations transition to a zero emissions world.
The increasing occurrence of natural disasters due to climate change is also expected to see members receiving lower lifetime returns, according to the findings.
For Actuaries Institute’s president, Nicolette Rubinsztein, “many Australians understand the physical risks posed by climate change, but few appreciate the impact it could have on their mortality risks and their retirement savings”.
In a scenario where a superannuation member was unemployed for one year in 10, they would be 11 per cent worse off by the time they reach retirement, it was highlighted.
The findings considered that a member on $75,000 a year for nine out of 10 years with returns on their super of 4.80 per cent would lose $41,000 as their balance falls from $382,000 to $341,000.
If a superannuation member with the same salary sees a fall in returns by just 1 per cent, the superannuation member would lose 18 per cent over their lifetime.
Under this situation, the member would retire with $313,000 instead of the $382,000 as expected today.
Impact on the government
The flow-on effect of lower superannuation returns will also hit the government hard, with low accumulation of savings for retirees meaning more people will be eligible for the pension.
The expected age pension expenditure on the median earner is estimated to be $20,000 to $30,000, assuming current levels of population mortality.
“There may be a greater reliance on the Age Pension if climate change seriously diminishes superannuation balances, and a higher cost of provisioning for future Age Pension liabilities if investment returns are lower,” Actuaries Institute concluded in its report.
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