Pension will stick around
Future super fails the comfort test
A MAJORITY of Australians will rely on the age pension to help pay for their retirement, despite rising superannuation savings.
A new report by the Actuaries Institute and Rice Warner forecasts the retirement incomes of more than half of today’s 30-year-olds will comprise at least one-third age pension payments.
It says many wealthier retirees will continue to receive some pension but warns that Middle Australia is at risk of getting squeezed.
Younger Australians who worry about the pension disappearing decades from now shouldn’t lose sleep. Actuaries Institute chief executive David Bell said it would remain a “very significant proportion” of people’s retirement incomes in the future. “Eighty-five per cent of people over 65 today are on a full or part pension – that’s only likely to be down to about 75 per cent in 30 or 40 years,” he said.
The institute’s For Richer, For Poorer report says super will fund a big- ger proportion of future retirement incomes, but the reduced cost to the government will be offset by a greater number of retirees who will live for longer. “While the super system is working well generally, it will not deliver comfortable retirements for all groups,” Mr Bell said, singling out single women as those likely to experience the lowest incomes.
Association of Superannuation Funds of Australia chief executive Pauline Vamos (pictured) said the age pension was sustainable. “Australia’s cost of delivering the age pension is less than 4 per cent of GDP,” Ms Vamos said. “When you look at other Western countries, their pension costs are up to double-digit figures.”