A report from The Actuaries Institute and Rice Warner believes the shortfall in retirement savings needed by middle Australians will fuel the need for a pension.

More than half of today’s 30 year-olds will need at least some form of government assistance if they are to survive past retirement.

Actuaries Institute CEO David Bell believed pensions would remain a ‘very significant proportion’ of people’s retirement income in the future.

“Eighty-five per cent of people over 65 today are on a full or part pension – that’s only likely to be down to about 75 per cent in 30 or 40 years.”

Superannuation is expected to fund a larger proportion of retirees. However, as people live longer their savings won’t go as far – and the government will have to kick-in.

“While the super system is working well generally,” continued Mr Bell, “It will not deliver comfortable retirements for all groups.

“We think there’s a risk that the Middle Australia of the future will have to pay higher taxes to fund current and future retirees – which in turn reduces their capacity to pay for their own retirement, and it’s likely that the growth in property values experienced by current retirees won’t apply to them.”

Pauline Vamos, CEO of Superannuation Funds Australia, believed the aged pension was sustainable.

“Australia’s cost of delivering the age pension is less than four per cent of GDP. When you look at other western countries, their pension costs are up to double-digit figures.

“There will be a safety net for the most vulnerable – how thick that safety net is and whether it covers all health care costs is another issue.”

It was “still early days” for Australia’s superannuation system, Ms Vamos continued. At just 22 years old Australia’s superannuation systems “hasn’t been able to do its job yet.”

About The Author

Someone you can depend on to respect you and care for your dog. Let me help you give your dog the life it deserves.

Leave a Reply

Your email address will not be published.