Changes to ‘super size’ retirement savings

For the average Australian worker, legislated rises in superannuation will mean an extra $85,000 in their super account at retirement.

The Association of Superannuation Funds of Australia on Wednesday released a report on how the increases set to kick in from July 1 will “super-size” retirement balances.

Super balances are also set for a whopper year of double-digit gains, despite COVID-19 wobbles.

The rise in the superannuation guarantee rate to 10 per cent from next month represents an extra $19,000 in a worker’s nest egg at retirement.

With the rate set to rise in steps to 12 per cent by 2025, and many workers making voluntary contributions, the nation’s pool of retirement savings is tipped to swell to $5 trillion by the early 2030s.

“The key objective of super is to provide dignity in retirement,” ASFA deputy CEO Glen McCrea said.

The increase in the super guarantee to 12 per cent will also mean a rise in the number of Australian workers able to reach the industry’s “comfortable standard” at retirement of $545,000 for a single person.

Currently, only 25 per cent of Australians achieve a self-funded retirement.

“By 2050, that number is set to double as a result of the super system moving to 12 per cent, Mr McCrea said.

“It’s a significant shift which will underpin Australia’s fiscal sustainability by diminishing the reliance on the age pension.”

The independent Grattan Institute argues workers will pay for the increases through lower wages.

Some federal Liberal MPs want the superannuation system to be scrapped altogether, arguing it was set up by Labor to benefit unions.

 

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