While retirees have been hit hard by the ongoing cost of living crisis, there is some light at the end of the tunnel with new findings suggesting that Australian retirees could become the wealthiest in the world.
The research from Super Members Council indicates the nation’s pension assets are projected to surpass the UK’s in 2030 and Canada’s by 2031, meaning the collective nest egg will become the second richest in the world behind only the United States, despite having the 55th highest population.
According to the council’s analysis, between 2001 and 2023, Australia’s cumulative superannuation contributions were the highest among OECD countries and well above the OECD average.
Super Members Council CEO Misha Schubert said Australia’s super system was the envy of the world, with the “fastest growing super system globally – twice the rate of international peers.”
“We’re the only OECD country where spending on government-funded pension payments is falling and will continue to fall,” she said.
Schubert highlighted that the nation’s superannuation was a “great Australian success story” thanks to its compulsory and universal nature combined with strong preservation rules.
“Three key policy settings have made Australia’s super system one of the biggest and most effective internationally and underpin its long-term success,” she said.
“Because super is universal, compulsory and preserved until our retirements, total system contributions are projected to reach $141 billion for the financial year 2024-25.
“These safeguards – especially that people’s investments are preserved until retirement – are the secret sauce of super, giving Australians in their millions the power of compound returns over decades.”
With funds under management currently totaling $4.1 trillion, Australia’s superannuation system exceeds the size of any single sovereign wealth fund, including those of Norway ($2.8 trillion) and China ($2.1 trillion).
The findings come amid newly announced reforms from the Federal Government aimed at helping older Australians make better use of their retirement savings by improving the quality and transparency of superannuation, paving the way for a more secure retirement for many.
As part of the reforms package, the Federal Government is set to improve resources on its financial advice website, Moneysmart, and introduce new regulations to offer superannuation members more options.
The superannuation industry will also implement voluntary best practice principles to enhance the quality of services, while a new reporting framework will help retirees better track and compare their superannuation products.
Treasurer Jim Chalmers said the reforms “will empower more Australians to make the most of their superannuation”.
“Today I am announcing a new package of reforms that will help give retirees peace of mind, help them make their super go further and provide more support to navigate retirement,” Chalmers said in a speech to the Association of Superannuation Funds of Australia on Wednesday, November 20.
“These changes will empower more Australians to make the most of their superannuation through more trusted information, better products and greater transparency.”
The reforms will focus on four critical areas to strengthen retirement outcomes:
-with AAP.