The Federal Government may be able to contain the erosion of superannuation assets to as little as between 6% and 8% but only if ends its hardship early release superannuation on 30 December, as planned, and allows the on-schedule increase in the superannuation guarantee to 12%.
That is part of the bottom line of a new analysis conducted by major consultancy, Deloitte as part of an update of its Dynamics of the Australian Superannuation System.
The Deloitte projections are based on the following fundamentals:
- Total amount withdrawn due to early release of super of $45 billion;
- Reduced contributions due to current effective unemployment rate of 13.3%, which is expected to continue through to end of 2021; and
- Allowing for actual returns for FY20, and lower short-term investment returns for FY21 and FY22 (due to COVID-19 effects), before returning to the long-term average.
Deloitte superannuation partner, Russell Mason said that on that basis, the projected assets at 30 June 2038 are expected to fall from the previously projected value of $9.8 trillion to a revised estimate of $9.1 trillion – a decline of roughly 6%.
“For comparison purposes, the projected assets at 30 June 2030 (i.e. in ten years’ time) have been revised down from $6.3 trillion to $5.8 trillion – a decline of almost 8%,” he said.
Mason said the projections, developed by Deloitte actuary, Diane Somerville, assumed a gradual improvement in business conditions as companies adapt to COVID-safe requirements and assumed that a vaccine would become available in the next two years.
He said the assumptions also included lifting the SG to 12% and ending the early release program on 30 December, as announced by the Treasurer, Josh Frydenberg.
