The latest AMP Retirement Adequacy Index found the average worker can now expect to retire on just under $52,000 per year, around $3,000 higher than 2011. The projected super balance at retirement for the average worker rose by around 7 per cent.
However, more than a quarter of this is the result of delayed retirement ages (the share of retirees aged over 65 rose from 24 per cent to 28 per cent over the past year) with the remainder due to increasing super balances (largely influenced by increasing wages).
Falling contribution rates have seen projected future super incomes in retirement fall back for workers over 55, and the projected share of older workers’ net retirement income made up by the pension has risen by 4-5 per cent, AMP found.
This mean more of the ageing burden has shifted to the public purse. “In other words, key trends in this issue [of the index] – super savings down for older workers, but projected pension payments up – are the opposite of longer term hopes for the superannuation system,” the report stated.
Overall retirement adequacy increased slightly from 69.4 per cent in 2011 to 69.8 per cent as stronger market conditions towards the end of 2012 and an average 6 per cent increase in salaries year-on-year helped boost super savings.
Overall rates for contributions into superannuation fell slightly over the course of 2012, ending the year at 12.1 per cent, down from 12.3 per cent in 2011, which AMP said was the lowest level since the index began in 2007.
The super adequacy of females did not improve relative to males, improving at about the same rate, leaving the super shortfall of females relative to males unchanged at around 32 per cent.
AMP Financial Services managing director Craig Meller said while it was good to see a slight uptick in adequacy, the analysis suggested declining levels of engagement with superannuation.
“The index shows a slight increase in adequacy levels, which is good news for working Australians. However, a sharp drop in voluntary contributions among older workers is a worrying trend as higher numbers of people approach retirement,” he said.
Mr Meller suggested the increase in concessional contributions caps would boost engagement.
“It’s important for individuals to think about what sort of life they want for themselves in retirement and to factor that into their planning. It’s been a challenging few years but it is important to remember that super remains the most tax-effective long-terms savings strategy,” he said.
