Just over a fifth of super fund members are making superannuation contributions beyond the compulsory level, but this is down on most recent years, research has found.
20.8% of super fund members – around 2.2 million people – made super contributions above the compulsory level in the 2017 calendar year, found Roy Morgan Research. This is up slightly from the 20.4% in 2016, but down from the recent peak of 25.5% in 2009.
“Making superannuation payments beyond 9.5% has been recognised by the government as necessary to provide adequate superannuation in retirement,” said Roy Morgan Research.
“Fund members however appear unlikely to increase their contributions voluntarily and are currently falling well short of this objective.”
Unsurprisingly, the research found a direct correlation between income levels and the proportion of people making additional super contributions. 45% of people with ‘personal income’ of $150,000 or more were making extra super contributions, compared to 21.9% of people earning between $70,000 and $79,000 or 13.2% for people earning $25,000-$49,000.
“With the Government delaying the time for the SG rate to reach 12%, it will be even more important for individuals to voluntarily increase their level of contributions (within the current limits), otherwise they are more likely to fall behind in their retirement funding,” said Norman Morris, Industry Communications Director with Roy Morgan.
The Super Guarantee rate was set to reach 12% on 1 July 2019, but this was delayed to 1 July 2025 by the Coalition.
“We have seen that there are major competing priorities when it comes to people choosing to increase retirement funding options. Young age groups may be more focused on exciting lifestyle options. Young families often see the priority needs of their children to be more immediate and don’t have discretionary spending or saving capacity,” said Mr Morris.
40.8% of Baby Boomers are contributing extra to super, compared to 26.8% of Gen X, 12.2% of millennials and 5.0% for Gen Z, according to the research.
“In addition, the recent changes announced by both parties relating to superannuation have the potential to reduce the confidence in the long term nature of superannuation which has to potentially cover a period of fifty or sixty years,” said Mr Morris.