Workers under 40 might not realise it, but not so long ago most Australians had to rely solely on the Age Pension when they retired. That only started to change when Award Super was introduced in the mid 1980s. Then, in 1992, the Government made super an entitlement for most Australian employees.
And the benefits to our future have been huge. For workers – and for the country.
Super Facts.
Who has super?
Before it became an entitlement for most working Australians, only around 32% had super – mainly public servants and white-collar executives who were male.*
Now that it’s an entitlement, over 94% of Australian workers have super. Today, your employer must contribute at least 9% of your income to your chosen super fund.*
Click here for for more information on choice of super funds.
Why do we need super?
As recently as 1975, an average Australian could expect to live to 73. Now it’s 82.* That’s good news, but now that we spend twice as long in retirement, we need more money so we can enjoy those extra years.
Of course, it is a good thing that we have the Age Pension as a safety net. But with many more people receiving it for much longer, the Age Pension alone is unlikely to deliver the quality of life most people have come to expect.
And remember, the full Government Age Pension as at 20 September 2011 is just $19,468 per year for singles and $29,353 per year for couples (including the Pension Supplement and subject to income and assets tests). That might be enough to get you through day to day living expenses, but if you want a little more out of life in your retirement, super is a tax-effective way to save for the future.
So maximising our super has become much more important.
Click here for ABS ageing statistics on expected longevity and click here for Age Pension rates.
Has super made a difference?
Before super became an entitlement, most Australians retired with virtually no retirement savings. They relied almost entirely on the Age Pension. But our modelling shows that a typical Australian who starts work today could expect to retire with super of around $350,000.*
Naturally, most people retiring in the near future will not have had the benefit of receiving super for their entire working life, so they’ll retire with less than that. But even a smaller amount of super can be of great benefit. It can help pay off a home loan, fund renovations or, if rolled over into an Account Based Pension through their Industry SuperFund, used to provide additional income that supplements the Age Pension.
What are the other benefits of super?
Super offers very favourable tax benefits for many Australians. Your employer contribution goes to your super fund before your income tax is deducted and that contribution into super is taxed at only 15%. The earnings on your super balance are also taxed at a low rate of just 15% until you turn 60, after which the earnings are tax free. For many people, these tax benefits can be very beneficial in the long term.
If you keep your super in the superannuation environment after retirement, in an account based pension for example, the earnings can continue to be tax free (depending on age and income tests).
You should also think about ways you can boost your super by putting in just a little extra each payday. There are some useful tips on how you can boost your super here.
Savings that help all Australians
Australia has a superannuation savings pool of over $1.3 trillion dollars. That’s as big as Australia’s annual Gross Domestic Product (GDP). GDP is the market value of all final goods and services produced within a country in a given period. And, our savings pool is the fourth biggest pool in the world. This pool provides a buffer for our economy when economic conditions are tough and was critical in helping Australia avoid a recession during the GFC.
And becuase Industry SuperFunds invest in infrastructure, members' super helps create jobs and build Australia.
So your super isn’t just working to give you a better retirement in the future, it’s contributing to your life today.
You’re better off with an Industry SuperFund
Super is good for you and for Australia. But not all super funds are the same. In fact, you could be much better off with an Industry SuperFund. Industry SuperFunds are run only to benefit members – that’s what they were created for.
Low fees and better long-term performance
Industry SuperFunds have low fees and pay no commissions to financial planners. That means less money is deducted from your super contributions, leaving you with more money when you retire.
They also have a long-term history of strong performance.** An average member of an Industry SuperFund would be $2,703 better off over the past five years compared to an average member of a retail super fund (based on fees and investment returns).†
Click here to compare the fees of Industry SuperFunds with retail super funds.
Look for the Industry SuperFunds' Symbol
There’s an Industry SuperFund for every Australian worker. To find the one that’s right for you, just click here.
*See the Assumptions page for more information
**Past performance is not a reliable indicator of future performance
† Source SuperRatings, commissioned by Industry Super Nework, a division of Industry Fund Services P/L ABN 54 007 016 195 AFSL 232514.) For more information refer to the Assumptions page. Past performance is not a reliable indicator of future performance. Comparisons use average chargeable fees and average actual investment returns for 16 Industry SuperFunds and 16 retail super funds. Current at 30 September 2011 and may be revised if further information becomes available. Assumptions - opening balance of $20,000, starting salary of $50,000; super contributions 9%; 3.5% salary increase per annum; actual earnings figures provided by funds for 1, 3 and 5 years; contribution fee for master trusts assumed to be nil, with asset and investment fees based on standard rates for each fund; employer asset size $150,000.