Australians need to put a minimum of an extra 5.5 per cent of their salaries into superannuation each year on top of the super guarantee, experts from Deloitte Actuaries and Consultants (A&C) believe.
Wayne Walker, Deloitte A&C specialist superannuation adviser, said the additional contributions were important as the current super system would not deliver adequate savings for retirement.
“The bottom line is that if we leave the system in its current form, members will need to contribute more – much more – to achieve even a modest level of financial security for their retirement,” he said.
The Deloitte A&C Adequacy and the Australian Superannuation System – a Point of View report noted that the majority of Australians had super balances of “at best a third” of what the Association of Superannuation Funds of Australia (ASFA) believe is required for a modest lifestyle in retirement – $340,000 for men aged 65 in 2014, or $370,000 for women.
ASFA estimated that men would need at least $610,000 in superannuation to have a “comfortable lifestyle” in retirement, while women would need $680,000.
“It certainly does not allow for an extravagant or luxurious lifestyle,” Walker said.
“The fact that ASFA income standards presume that the retiree owns his or her own home outright, and is in good health is also often overlooked.”
Walker said that financial advice was an important element in helping Australians to better manage the shortfall between adequacy and availability of funds in retirement.
He added that most people did not receive financial advice until it was too late, with planners having tended to target those with the capacity to pay, as well as those approaching retirement.
“However things are changing,” he said. “Super funds are now much more active in offering advice. And the concepts of limited and intra-fund advice hold out the prospect of more cost effective advice for many more Australians considering the level of contributions, appropriate investment options, amount of insurance, etc.
“Adviser groups, including those operated within su¨perannuation funds, are also being innovative, with advice in Australia being 'digitally disrupted’ as new ways are being developed to deliver advice to Australians in almost real time and at minimal incremental cost.”
