Much greater contributions, and broad reform of the superannuation system, is required to provide a comfortable retirement for most Australians according to a report recently released by Deloitte. The report, Adequacy and the Australian Superannuation System A Deloitte Point of View 2014, argues for a dramatic increase in the Superannuation Guarantee rate, and a combined effort between government and superannuation funds to increase both retirement adequacy and member engagement.
The report forecasts that even by 2034 at least 75% of retirees will still receive all or part of the age pension under current eligibility. Also, according to ABS statistics, the next 10 years will see an additional 1.7 million Australian retirees and pre-retirees.
Deloitte says that, even with the move to a superannuation guarantee rate of 12% this will not be enough to provide for a comfortable retirement from superannuation. The calculations show that men would have to contribute 5.5% each working year, with women requiring an additional 7.5%, on top of the 12% superannuation guarantee currently scheduled . This would take the super guarantee rate to between 17.5% and 19.5%. Given the opposition to raising the rate to 15%, as some have suggested, this seems unlikely.
Also, this lower rate of superannuation contributions is made worse by successive governments reducing the concessional contribution caps, which according to Deloitte has “meant it is even more difficult for those close to retirement to claw back reductions to their super balances” from the GFC.