Climate change to hit super

Climate change, combined with an ageing population and lower economic growth, is creating the perfect storm for Australians’ finances, research shows. Forecasts of more natural disasters, combined with a world transitioning to net zero emissions (meaning fewer jobs in carbon-intensive industries) and increased under- or unemployment from weakening economies, will likely lead to lower super contributions and investment returns. Modelling from the Actuaries Institute suggests a person earning around $75,000pa could retire with 11% to 18% ($40,000 to $70,000) less in their super. The institute says people with the highest risk of diminished balances are those who are less considerate of climate change and have little diversification in investment portfolios.

If this rings true, there’s also going to be a greater reliance on the age pension as well as higher costs in its delivery. If investment returns were 1% lower every year, the institute predicts an additional $30,000 will be needed for the median earner on the age pension.

Further complicating this, within gen Y’s lifetime the occurrence of heatwaves will triple and they will be longer, leading to increased deaths among the elderly. Heatwaves have killed more Australians than any other natural disaster. The institute predicts deaths from heatwaves could rise 12% among over-65-year-olds by 2060-80 in some regions.

“Understanding the potentially significant implications of climate change is crucial to Australians’ wellbeing,” says Actuaries Institute president Nicolette Rubinsztein.

Australian Bureau of Statistics figures project that by 2050 the population of over 65s and over 85s will nearly double and triple respectively.