The research (report attached) found Australia would have a retirement savings gap of $836 billion under 12 per cent superannuation, down from $897 billion in 2009.  This is the first decline in the savings gap since it was first measured in 2002.  The research also showed that in the absence of an increase in compulsory contributions from 9 per cent to 12 per cent, the gap would increase to $1.02 trillion.

The research (undertaken by Rice Warner Actuaries for the Financial Services Council) provides a snapshot of Australia’s progress as a nation towards funding a comfortable retirement. The retirement savings gap is the difference between what is actually being saved through superannuation and what is needed to sustain a comfortable lifestyle after ceasing work. 

John Brogden, CEO of the Financial Services Council, said the findings showed the importance of increasing the Superannuation Guarantee from 9 per cent to 12 per cent. 

“The Senate must support the rise to 12 per cent superannuation if Australians are to enjoy a comfortable retirement,” Mr Brogden said. 

“An adequate annual retirement income is defined as 62.5 per cent of a person’s last salary. Our research shows 9 per cent superannuation will fail to provide the population with their expectations of a comfortable retirement. 

“The average 30-year-old will have an additional $108,000 in their superannuation account on retirement as a result of the increase to 12 per cent. Those already approaching retirement, aged 45 to 54, will benefit from $39,000 added to their super balance. 

“Increasing compulsory superannuation also has significant benefits for the Australian economy and the Budget. Higher savings would reduce Australia’s reliance on international investment, lower the current account deficit and ultimately provide a cheaper and more stable pool of funds for Australians to draw on. 

“Higher contributions would also lower the tax burden on working Australians as the population ages by reducing the draw on the Age Pension.”

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