Research Says Australian Pension Contributions Lacking

By Editorial 02 April, 2014

A significant number of Australians are unlikely to achieve adequate retirement incomes, even when all sources of savings are considered, according to research by professional services company Towers Watson and The University of Melbourne.

Based on data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey on persons in the age bracket 40 to 64, only 53 percent of couples and 22 percent of singles are on track to have a comfortable level of retirement income against the Association of Superannuation Funds of Australia's (ASFA) comfortable living Retirement Standard.

The research says that Australians in this age group are heavily reliant on retirement savings outside superannuation and the age pension. If non-super retirement savings are excluded, just 32 percent of couples and 11 percent of single persons have provisioned for a comfortable retirement. If the age pension is also excluded, these figures fall to 15 and 5 percent, respectively.

For a comfortable retirement, the ASFA projects that Australian couples will need AUD57,655 (USD53,270) a year, while single persons will need AUD42,158.

"We found the projected retirement income of couples in this demographic was much higher than for single people," John Burnett, senior consultant with Towers Watson in Australia, said. "Couples on the median retirement income are expected to reach 100 percent of the target retirement income if superannuation, the age pension and other retirement savings are all considered. So that means more than 50 percent of couples are on track for a comfortable retirement if you take all the factors into account. We must also remember that not everyone surveyed will aspire to achieve this level of income in retirement."

The median projected retirement income for single persons in Australia is about 68 percent of the comfortable standard. Even when superannuation, the age pension, and other retirement savings are all considered, the median projected retirement income for singles is AUD12,393 below the benchmark each year.

Associate Professor Roger Wilkins from the Melbourne Institute at The University of Melbourne said single people are also going to be more heavily reliant on the age pension than couples. "The research indicates that between ages 65 to 90, the age pension will provide 61 percent of the retirement income of single people and 39 percent of the retirement income of couples. Moreover, 96 percent of single people and 89 percent of couples aged 40 to 64 today are expected to receive at least a partial age pension at some stage during retirement," he explained.

Tags: Individuals | Retirement | Australia | Services | Expats | Retire | Retirement |


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