The future of super

June 2021 – The median superannuation balance at retirement will increase from around $125,000 in 2020-21 to around $460,000 in 2060-61, as measured in 2020-21 dollars according to the Federal Government’s Intergenerational Report.

Around 16 million Australians, from a population of 25 million, collectively own around $3 trillion in superannuation assets.

Treasury says the value of these savings will continue to grow as the system matures into the 2040s. As at 31 March 2021 the superannuation system had assets under management valued around 157 per cent of GDP and that is projected this will grow to around 244 per cent of GDP by 30 June 2061.

Of this amount, it is estimated that almost three-quarters of funds under management will be held in the accumulation phase, the time when people are saving for retirement.

As super balances build, Age Pension payments should fall. However, superannuation receives favourable tax concessions. Treasury says it will be around 2040 when the cost of super tax concessions exceeds the cost of Age Pension expenditure.

Last year people were able to take $20,000 from their super accounts due to COVID, and three million people withdrew $37.8 billion. However, this caused only a “modest reduction” in funds under management, says the report.