Size of superannuation
As at 31 March 2013, total superannuation assets were valued at $1.58 trillion, which is roughly equivalent to Australia’s annual GDP. There was a 13.5 per cent increase in total estimated superannuation assets in the 12 months prior.44 The size of Australia’s superannuation industry relative to GDP has grown by 18 percentage points over the past 10 years.45
Participation in superannuation
During the 2011-12 financial year, contributions to superannuation totalled $117 billion. Employer contributions comprised $82 billion of the total, member contributions $34 billion and other contributions (for example spouse contributions or government co-contributions) comprised the remaining $1.2 billion.
Benefit payments made to June 2012 totalled $69.7 billion, comprising $34.9 billion in lump sum payments and $34.8 billion in pension payments.
Net contributions to June 2012 were $54.7 billion. Net growth of total superannuation assets to June 2012 were $49.6 billion.46
In 2009-10, there were around 754,000 people classified as self-employed by the ABS. This compares to 9.258 million wage and salary earners. However, around 29 per cent of the self-employed have no superannuation, more commonly males than females. On average, the self-employed are less likely to have superannuation than employees (Table C1); around 13 per cent of wage and salary earners say they have no superannuation (presumably part-timers below the threshold for the Superannuation Guarantee or the survey respondent not knowing about their superannuation).47
Table C1: Distribution of superannuation by main source of income and sex of person, Australia, 2009-10
At June 2012, there were almost 32 million superannuation accounts in Australia, which is almost three accounts for every worker.48
The SMSF sector remained the largest sector of the Australian superannuation industry, with 99 per cent of the number of funds and 31.5 per cent of the $1.58 trillion total superannuation assets as at 31 March 2013.
At 31 March 2013, there were around 503,000 SMSFs holding $496 billion in assets.49
There were also approximately 958,000 members in the SMSF sector, about 8 per cent of roughly 11.6 million members in Australian superannuation funds.50
The value of lost and unclaimed superannuation decreased from $20.9 billion in 2010-11 to $17.7 billion in 2011-12.51
An ABS survey in 2010–11 found that the average age at retirement for those who had retired in the previous five years was 61.4 (with the average for men being 62.5 years and 60.3 years for women).52
Superannuation, housing and other post-retirement expenses
Another relevant factor in putting superannuation and its role in retirement in context is housing tenure; whether the family home is owned or rented and whether, if owned, there is a mortgage. Housing expenses are much lower if retirees own their home outright. Where there are mortgage or rental payments to be made, this will affect the level of income needed to meeting living expenses, giving rise to a number of policy consequences.
The majority (77 per cent) of households in the age 65 or over category own their own homes and have no mortgage. Table C2 displays the home ownership statistics for households aged 65 and over.
Table C2: Proportion of households aged 65 and over by home ownership status
|Owner without a mortgage||75%||77%||82%|
|Owner with a mortgage||9%||6%||3%|
|Renter — State/Territory housing authority||5%||5%||5%|
|Renter — private landlord||8%||7%||5%|
While the majority of retirees might be mortgage-free, a large number of people who retire from age 65 onward use their retirement savings to pay off their mortgage and other expenses. Of those who retired at age 65 and above who received a lump sum payment, 32 per cent used a part of the payment on home-related expenses. Around 25 per cent of those who received a lump sum invested some of the amount in an annuity or other superannuation vehicle, and around 25 per cent invested outside super. Some will have done both, so half or less maintain their savings for future use.
A recent report issued by the superannuation fund, REST, summarised the results of a 2012 survey of over 50s which found that 47 per cent of respondents still had a mortgage and 24 per cent had other debts
Table C3: Use of lump sum payments for those who retired at age 65 and over and who received a lump sum
|Number of people
|% of people who
received a lump sum
|Number of people who received a lump sum||206.6|
|All methods of disbursement of lump sum payment from super*|
|Rolled it over/invested it in an approved deposit fund/deferred annuity or other superannuation scheme||43.9||21%|
|Purchased an immediate annuity||7.3||4%|
|Invested the money elsewhere/personal savings/bank||55.6||27%|
|Paid off home/paid for home improvements/bought new home||66.0||32%|
|Bought or paid off car/vehicle||38.3||19%|
|Cleared other outstanding debts||24.6||12%|
|Paid for a holiday||28.8||14%|
|Assisted family members||9.5||5%|
|Undecided/Did not know||7.4||4%|
Source: ABS, Charter Group estimates
*Lump sum might be used for more than one purpose.
On average, households of couples aged 65 and over spend approximately $44,000 a year on goods and services, while single people aged 65 and over spend approximately $23,000 a year. ASFA estimates54 that a single person aged 65 and over will need $22,641 a year for a modest lifestyle and $41,169 a year for a comfortable standard of living. A couple aged 65 and over will need $32,603 a year for a modest standard of living and $56,317 a year for a comfortable standard. Singles and couples aged 65 and over, should on average, be able to afford somewhere between a modest and comfortable standard of living. ABS data (Cat No 6523.0) indicate that median incomes are around 80 per cent of the average income for households aged 65 and over, so it is likely that the majority of households, particularly singles, can only afford the modest level of spending.
Table C4: Spending versus ASFA retirement living standards
|Average weekly spending||$855||$446|
|Average annual spending||$44,460||$23,192|
|ASFA — Modest single||$22 641|
|ASFA — Modest couple||$32,603|
|ASFA — Comfortable single||$41,169|
|ASFA — Comfortable couple||$56,317|
Source: ABS, ASFA Retirement Standard, March 2013 Quarter.
44 Australian Prudential Regulation Authority, Quarterly superannuation performance March 2013.
45 Deloitte Access Economics, Maximising superannuation capital: A report prepared for The Association of Superannuation Funds of Australia June 2013. < http://www.superannuation.asn.au/ArticleDocuments/1089/ASFA_MaximisingSuperannuationCapital_June2013.pdf.aspx >.
46 Australian Prudential Regulation Authority Annual superannuation bulletin June 2012.
47 The Association of Superannuation Funds of Australia, Ross Clare Equity and superannuation – the real issues September 2012. < http://www.superannuation.asn.au/ArticleDocuments/1189/ASFA_Equity-and-super_Sep2012.pdf.aspx >.
48 Australian Prudential Regulation Authority Annual superannuation bulletin June 2012.
49 Australian Prudential Regulation Authority Quarterly superannuation performance March 2013.
51 Australian Taxation Office Annual report 2011-12 October 2012. < http://annualreport.ato.gov.au/uploadedFiles/Content/Downloads/n0995-10-2012_js23899_w.pdf >.
52 Australian Bureau of Statistics 6238.0 – Retirement and Retirement Intentions, Australia, July 2010 to June 2011 December 2011. < http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6238.0July%202010%20to%20June%202011?OpenDocument >.
53 Retail Employees Superannuation Trust, The journey begins: Australia’s journey to retirement, 2012.
54 The Association of Superannuation Funds of Australia, ASFA retirement standard: March quarter 2013. < http://www.superannuation.asn.au/resources/retirement-standard >.