2015 Intergenerational Report (Australia in 2055): was there anything in it for your superannuation?
Every five years, the Australian Government releases a report that assesses the sustainability of current Government Policies for the next 40 years. It considers the changes in population, age profiling, economic growth and public finances.
This year there was a section (albeit small) on superannuation, and the expected trends for the next 40 years.
iSUPER® has provided a summary of the report and some key takeaways:
Employers are currently required to make minimum payments equivalent to 9.5 per cent of an employee’s salary to a superannuation fund, to help the employee save for retirement. This rate is scheduled to rise to 12 per cent between 1 July 2021 and 30 June 2026.
- Total Australian superannuation assets have increased strongly since compulsory superannuation was introduced in 1992. At the end of 2013-14, total superannuation assets were $1.84 trillion, around 116 per cent of GDP. As the superannuation system matures and wages grow, total Australian superannuation assets are expected to continue to increase and make a growing contribution to national savings.
- As more Australians receive compulsory superannuation contributions for longer periods of their working lives, they are likely to retire with higher superannuation balances. This will have important implications for reliance on payments made through the Age Pension.
- An ageing population also underlines the importance of considering the overall adequacy of our retirement incomes system — which combines compulsory and voluntary superannuation, and the Age Pension as a safety net. The Government will consider several aspects of the superannuation system as part of the review of the tax system. The Government is also considering improving the way in which the superannuation system transforms savings into retirement income streams.
*A full copy of the report can be found on the Australian Treasury website.
What are the key takeaways?
- superannuation will always receive concessional tax rates given the Australian Government’s reliance on the system to provide relief from the growing pressure on pension payments;
individuals will begin taking more interest in their superannuation benefit and view it more as an asset throughout their work life…rather than an afterthought;
individuals will want greater control over the investments and demand more transparency over the fees that are being charged; and
given the increase in the Employer’s contribution, the burden of funding retirement will fall back to the business community!
If you would like to hear more on the current and future trends on the superannuation industry, please feel free to contact one of the iSUPER® team.