Younger people will be marginally better off when they reach retirement because of the compulsory superannuation guarantee.
But a new report into retirement warns that the least wealthy sections of the community, both now and into the future, will continue to be dependent on the age pension to maintain even a modest lifestyle.
The Actuaries Institute is releasing a “retirement income white paper” which attempts to balance the fiscal pressures on the federal government and the financial stress facing many Australians as they save for or enter into retirement.
The report will be presented by David Murray, the chairman of the government’s financial system inquiry, on Wednesday.
Institute president Estelle Pearson says the report reinforces Mr Murray’s recommendations.
They include an overarching approach to retirement incomes that must include a review of superannuation tax incentives, the fiscal sustainability of the age pension and when the superannuation guarantee will be increased.
“Policymakers need to factor all of these aspects into the debate to make the right decisions about our future,” she says.
Overall, the white paper found that superannuation is doing what it was designed to do – accumulating assets to fund adequate retirement incomes and reducing dependence on the age pension.
It says the impact of the super guarantee has been important and means a 30-year old will have significantly greater assets at retirement than a 60-year old now.
But current retirees may need to access their home equity to supplement their retirement income, especially for those who live past life expectancy.