The Australian Institute of Superannuation Trustees (AIST) today welcomed the release of the 2021 Intergenerational Report, which highlights the essential and essential role of mandatory retirement pensions in ensuring that Australia is well placed to support its rapidly aging population.
AIST CEO Eva Scheerlinck said the report was a resounding endorsement of our maturing super system and the legislated timeline to increase the mandatory super rate to 12% by July 1, 2025 .
âTreasury projections suggest that with 12% super by 2025, the median retirement pension balance will drop from around $ 125,000 in 2020-2021 to around $ 460,000 in 2060-2061 in today’s dollars. A super balance of this size will have a huge impact on the future retirement outcomes of ordinary Australians who will enjoy greater financial security in retirement than the average retiree today, âsaid Ms Scheerlinck.
Ms Scheerlinck said the report showed in an important way that mandatory retirement has been effective in increasing individual retirement savings and reducing reliance on the age pension as the main source of retirement income.
âThis report highlights that our retirement income system is economically viable. As the younger generations retire with larger retirement savings, the total proportion of older Australians receiving the age pension will continue to decline. It is very significant to see that the number of retirees receiving a retirement pension is expected to halve by 2060. “
The report predicts that the combined total of age and service pension expenditure and tax relief for retirement pensions will increase from around 4.5% of GDP in 2020-2021 to 5.0% of GDP in 2060- 2061.
Ms Scheerlinck said she was pleased to see that Australia’s pension spending is expected to remain well below the average for OECD countries, where on average public pension spending is expected to rise to 9.4%. of GDP in 2050.
âThis report shows why Australia’s compulsory super system is the envy of the world. Our expiring mandatory retirement system means Australia is much better placed than most other countries to meet the future costs of an aging population.
Ms Scheerlinck said that while the report noted that the gap between men and women in retirement savings would narrow over the next 40 years as women’s participation in the labor market increased, there were policy changes. were still needed to speed up this process.
âPaying a retirement pension on paid parental leave is an obvious next step,â Ms. Scheerlinck said.
/ Public distribution. This material is from the original organization and may be ad hoc in nature, edited for clarity, style and length.