Half of retirees rely on pension
ALMOST half of all retirees say their main source of income is government pensions, despite a quarter of a century of compulsory superannuation aimed at beefing up their nest eggs.
Super specialists say government rule changes are eroding people’s confidence in the system, and have called for the compulsory Superannuation Guarantee payments — currently 9.5 per cent of workers’ income — to rise further to avoid a pension payment crunch for future generations.
New Bureau of Statistics figures show that 49 per cent of men and 45 per cent of women rank government pensions and allowances as their main income source.
One-third of male retirees say super provides their main income, but for women it’s only 17 per cent, while 37 per cent of retired women live on their partner’s income.
The numbers have improved from 20 years ago, when more than 65 per cent of retirees received most of their money through pensions, but show that super still needs decades to mature.
Super only became compulsory in 1992 at just 3 per cent of workers’ wages. Moves to push it to 12 per cent this decade were announced then stopped by Canberra’s politicians.
The current timeline is for the SG to rise from 9.5 per cent to 10 per cent in 2021, then to 12 per cent by 2025, but the Association of Superannuation Funds of Australia says it needs to happen “sooner rather than later”.
Marinis Financial Group managing director Theo Marinis said super was still a few decades from reaching its full potential because many retirees received nothing for half their working lives, so they missed the effect of their investments compounding over several decades.
Certified financial planner Patrick Canion said rule changes had created uncertainty and distrust.
“For over 30 years I’ve heard people complain about politicians playing with super and they are right.,” he said.
“Governments need to give a generational guarantee of no changes to super to restore trust. They did it with the Future Fund, they can do it with super.”