Self-funded retirees now outnumber pensioners: report

Research strongly suggests that Australia’s superannuation system is working.

typical retiree

More than half of Australians who retire today will have enough money to be self-funded rather than reliant on the Age Pension, according to new research from Challenger.

As at December 2018, around 55 per cent of 66-year-olds could not access the pension because their income and assets were too high, with 20 per cent able to draw a part-Age Pension and just 25 per cent receiving a full Age Pension.

And, according to YourLifeChoices research, the number of retirees able to qualify for the Age Pension will decrease even further. In the 2019 Ensuring financial security in retirement survey, 65 per cent of 60 to 64-year-olds (42 per cent of whom are already retired) are fully self-funded.

The research strongly indicates that Australia’s superannuation system is working, says Challenger’s chair of retirement income, Jeremy Cooper.

“Contrary to many opinions, super is reducing reliance on the Age Pension for the large majority of people entering retirement,” he stated in the Challenger report.

“The evidence for this is that the average newly retired Australian is not accessing the Age Pension at all.”

Compulsory superannuation was introduced in 1992. With 27 years of contributions under their belts, the average consolidated balance for Australian singles aged between 60 and 64 exceeded $300,000 in 2016-17 based on Australian Taxation Office aggregates for super balances. The super balance of a typical couple starting retirement today is around $400,000 and, depending on inflation, is estimated to be $600,000 in five years’ time.

And, according to Department of Social Services data, at the end of last year, 45 per cent of 66-year-olds were accessing the pension but only 25 per cent were receiving a full pension.

“With the typical super balance at retirement for a household being over $400,000, and most owning their own home, a sizeable majority of new retirees won’t be entitled to the full age pension at the start of retirement,” the report says.

“As super balances continue to grow, most retirees can expect to spend longer in retirement before they receive any Age Pension.”

Are you surprised at these numbers? Have you noticed a shift from pension-reliant retirees to more self-funded retirees?

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    COMMENTS

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    patti
    27th Jun 2019
    9:51am
    Well, isn't that what was planned when Superannuation was first introduced? Sadly, not all of us have had access to enough to fund our retirement. I will be on full pension for the rest of my life. And with so many casual jobs now happening, the future is not looking rosy for many retirees.
    Chris B T
    27th Jun 2019
    10:08am
    Introduced in 1992 for Blue Collar Workers at around 3.5% if my memory is correct.
    (PS and Senior/Supervisory Positions already in place)
    This will help but not fully Replace Pension for the folk who only started to receive this so late in working life.
    Compounding Interest works it's magic over long periods, the longer the better.
    Yes it could replace pension but how this Fund Is Used is the Problem.
    Anonymous
    27th Jun 2019
    11:13am
    gee you have a good memory - I just went and checked and it was 4% from 01Jul92. However some of us were already contributing from Aug91 (I just checked my circumstances and I was one of those). It went up to 5 % a year later and 6% three years.
    Anonymous
    27th Jun 2019
    11:17am
    Chris - further I think there are some 198 super funds - some do well otherwise poorly and others in between. I've been lucky as mine has been in top 10 every year for past 20 years.
    Also outside of Super there is the future fund that what created to pay off public servant, political, judges, military pensions - in 2007 it was 40 billion and believe it is now over 190 billion - apparently it is very hard for politicians to get there hands on this which is s good thing BUT - once it has enough money to pay all those pensions I wonder what it could be used for to benefit Australia. Costello created it and is still managing it.
    leek
    27th Jun 2019
    12:41pm
    I worked for a company that set up super funds for the employees in 1986 and they put double what they had to into the super fund for us. It was sort of part of incentive to keep us as employees. The company was a start up tech company, and they didn't want to lose us.
    Wesfarmers eventually bought us, and it sort of went down hill from there. Redunancies started and that "gun ho" excitement we had as we were growing was gone.
    Still the Superannuation kept going for the original employees like me.
    Anonymous
    28th Jun 2019
    10:03am
    Lucky person, leek. Had super as well from 1978 but computerization made us redundant and we got the full amount paid out. Was enough to pay out our mortgage but I never got a similar well paid job again.
    Chris B T
    28th Jun 2019
    12:45pm
    Minority Groups, it wasn't till 92 superannuation was Compulsory.
    Then under Keating and successive Governments it was a trade off instead of wage increase.
    The reality is you are Paying For Superannuation out money Deprived Of You At That Time.
    No Gifting Here.
    This has good points and bad.
    The Generous Employers Gave more and Increased over the Years of Service as Loyalty Payments. Not unlike what Leek and Cowboy Jim Received, Minority Groups.
    Lookfar
    27th Jun 2019
    10:34am
    What was all the bombast from the Liberal Govt how they didn't have enough money to make it a decent pension because of the future increase when the figures are saying that those on the pension will decrease?
    johnp
    28th Jun 2019
    8:55am
    Agree 100% Lookfar. Govt continues to lie and denigrate retirees using welfare. Govt lies because proportion of self funded retirees increases rapidly and as a result they are actually giving charity and donating to govt.

    27th Jun 2019
    11:08am
    this is exactly what Paul Keating said would happen in 1991 - although he believed that 15% should be compulsory set level (many are anyway) but its still only 9.25%. Keating also thought we would not know until 2031 (40 years after implementation) to see whether ti was working. To be ahead of the curve is excellent because it should mean there is more for the generally needy when required.
    As a elf funded retiree I am delighted to see these results.
    As we have over 2 trillion in super the super funds should be investing in Australia infrastructure and other opportunities to grow Australia

    27th Jun 2019
    11:57am
    Thank you Paul Keating for allowing all Australians to be able to enjoy a system that was only available to a few. The figures shown are exactly what he set out to achieve; a better retirement for workers with the added advantage of an easing on government expenditure.
    TREBOR
    27th Jun 2019
    10:49pm
    Now all we need is to bring them all under the same umbrella by the same rules and values - and prohibit classification or superannuation contributors into class is society...

    Simple policy statement - you may save in super for your retirement to a point sufficient to permit you a reasonable standard of living and enjoyment - what you may not do is use it as a vehicle to reduce your tax liability during working life and also create a massive tax-free return to yourself in retirement - and all above the prescribed level will be deemed to be taxable income.

    That way if you have the opportunity to save a lot - you will still be better off..... but hey - how many good runs do you want in life? You had one already just to get to that position....
    inextratime
    27th Jun 2019
    12:00pm
    I started a super fund in 1978. Was told by the salesman it would be worth $200k by 2001.
    In 1992 it was worth less than I had contributed at around 30K. The super company changed hands a couple of times in between but at the end it was the same company that has now got to pay out millions to its clients. Also note that not every company pays the 9.25% Public Service and some multinationals pay up to 17%
    inextratime
    27th Jun 2019
    12:00pm
    I started a super fund in 1978. Was told by the salesman it would be worth $200k by 2001.
    In 1992 it was worth less than I had contributed at around 30K. The super company changed hands a couple of times in between but at the end it was the same company that has now got to pay out millions to its clients. Also note that not every company pays the 9.25% Public Service and some multinationals pay up to 17%
    Tricky
    27th Jun 2019
    12:47pm
    Change 'Deeming Rates" for term deposits if its going so well.
    Old Geezer
    27th Jun 2019
    12:54pm
    If you can't get a lot better than the deem8ng rates then you only have yourself to blame.
    Nanna75
    27th Jun 2019
    3:39pm
    Old Geezer
    I'm a 77 year old widow and rely on my pension. My husband left me a load of debt when he died having lost money in the stock market which would have been used for our retirement. Ive had to sell my home and put the small profit in a term deposit as I don't want to invest in anything risky and after Centrelink takes its cut am worse off than keeping it a biscuit box under my bed! I don't really have a choice and neither do a lot of other folks in my situation. I'm thankful to get my pension.
    Thoughtful
    27th Jun 2019
    7:23pm
    Nanna75, you are one of many, I feel, who are not reflected in these figures. Others are casual workers, carers for family, mothers who have taken time out of the work force and the ever increasing number of seniors retrenched at a later age. The system works OK if you have been in permanent full-time employment all of your working life. The OAP does step in to help in these cases but I still feel the system is far from perfect.
    Old Geezer
    28th Jun 2019
    7:39pm
    The worstinvestment you can have is money in the bank. After inflation and tax you lose.
    Mad as Hell
    27th Jun 2019
    1:08pm
    So why did I have cut in my part pension? I was doing my best to stimulate the economy. Now the LNP want to give a $158 billion tax to the well off.
    Triss
    27th Jun 2019
    7:08pm
    Of course they do, mad as hell, because Turnbull, Morrison and the rest of the wealthy and highly paid will be given a good slug of that.
    I’ll be turning into a parrot soon repeating “Don’t put millionaires and multimillionaires in positions of power because they use it to make themselves more wealthy.”
    floss
    27th Jun 2019
    2:40pm
    All thanks to Keating , no thanks to that bunch of morons that go under the name of the L.N.P.
    Lookfar
    27th Jun 2019
    7:38pm
    Perhaps salutary to hear from the Children, - to put it into perspective,
    https://www.facebook.com/watch/?v=316072785742404

    Of course the .01% don't care about our children or our grandchildren, it is up to us, - and only us.
    GeorgeM
    28th Jun 2019
    12:28am
    Keating was the moron who did the maximum damage to age pensions. To be fair to both Liberals and Labor, to recall the big items - Fraser (Lib) stole the money out of the National Welfare Fund, Keating (Labor) then shut down that Fund, brought in Deeming Rates for Incomes Test and also the reviled Assets test, Keating also increased Pension Age for women from 60 to 65 (made them Equal!), Swan (Labor) increased Pension Age to 67, and (the nail in the coffin) in Jan 2017 Morrison (as per Abbott / Hockey / Turnbull plans) implemented the revised nasty Assets Test hitting over 420,000 part-pensioners with some losing up to $14,000 per annum income after they had already planned retirement and settled in hoping for life as normal. Also, Keating delivered the biggest Recession all of us have experienced destroying wealth invested in shares, while also destroying 10s of thousands of jobs preventing people's abilities to earn sufficiently to cope with expenses and to save for retirement. Also, he destroyed Manufacturing and set in motion the Outsourcing of jobs as companies tried to get cheaper labour following Keating's recession. What an a...hole! The Right-wing people love him, because he did it for them! Rich people made heaps out of the great Super concessions too.

    Stop blaming one side, as BOTH these nasty anti-retirees parties are to blame, but Keating was the worst by a country mile.
    TREBOR
    27th Jun 2019
    10:44pm
    Sorry to tell you after so long beating that old drum - but that was inevitable given the steady progression of superannuation ..... wait until it has actually attained a 'lifetime' of the equivalent of fifty working years FULL-TIME for all - and the results will be truly astounding... including showing clearly that women do NOT suffer under the present situation at all, given that they are slotted, by government decree, into the safe super jobs with all the perks, on a daily basis, while men are increasingly beggars on the streets of employment.

    And all this just a very few short years after Fat Joe The Magnificent Hero of the Right, backed up by Der Cormannator, told us that pensions etc were unsustainable into the future... even up to early this year, Learned Pundits from the Treasury etc were telling us that pensions would be a savage drain on the budget..

    WHAT A JOKE!!

    I will ask you again - WHY are these people in government and being paid handsomely to provide us with a steady diet of bullshit and propaganda?
    GeorgeM
    28th Jun 2019
    12:13am
    Why does one not feel confident that analysis by Challenger could be massaged to create a message? It is because of statements such as "..the average consolidated balance for Australian singles aged between 60 and 64 exceeded $300,000 in 2016-17..." . Anybody using "averages" to arrive at conclusions is obviously misinterpreting data. e.g. this particular average includes people like Turnbull, etc, etc! What a joke! Also, I remember some recent data published in YLC which talked of low typical super balances currently around $100,000 when they were comparing men & women's super balance on retirement, so $300,000 is clearly a furphy.
    Yes, the number of people getting pensions would have been reduced due to the nasty Asset Test changes of 2017, besides the ongoing stupidly high Deeming rates. Nothing to crow about, in fact a shame for a nasty anti-retiree Govt.
    simo60
    1st Sep 2019
    7:27am
    super plans where around in 1970 for people to start a retirement plan . Thank you to AMP .


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