Expect 80,000 to have a $3m super balance by 2025: ASFA

Despite a big focus on the government’s tax changes to individuals with over $3 million in super, the Association of Superannuation Funds of Australia (ASFA) data shows just 2.5 per cent of the population have a balance of more than $1 million. 

Earlier this year, Treasurer Jim Chalmers announced an additional tax of 15 per cent on the earnings of an individual’s super benefits over $3 million will apply from 1 July 2025. 

In the organisation’s super balance update, it found 2.5 per cent of the population have a super account of more than $1 million, as of June 2021. 

This represents 417,567 individuals, ASFA said, and is a 29 per cent increase from the 322,200 individuals who held over $1 million in June 2019.

Only 0.3 per cent have more than $3 million – the balances affected by the government’s tax changes, representing 55,000 individuals, up from 35,000 in 2019.

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However, it is a growing volume with the amount holding over $3 million expected to increase to 0.5 per cent by 2025, mostly via growth in the 0.3 per cent of the population who already hold between $2 million and $3 million. 

“Older Australians are more likely to have relatively high superannuation balances, both because they have had more time to accumulate a balance and because contribution caps were more accommodating in the past.

“Given recent investment returns and further contributions, the Treasury estimate that by July 2025 there will be around 80,000 individuals with more than $3 million in superannuation is quite reasonable.”

Of the 0.5 per cent with more than $3 million in super already, around 60 per cent are male and around 85 per cent are aged 60 and over. Around 35 per cent have a taxable income of $200,000, but another 35 per cent have less than $30,000.

Moreover, ASFA’s projections anticipate that approximately 50 per cent of all Australian retirees will be able to afford a comfortable retirement by 2050, up from 30 per cent currently.

The industry body revealed earlier this month that the comfortable retirement standard is $595,000 for individuals and $690,000 for couples, assuming access to full or part age pension as the balance is drawn down.

“Strong investment returns together with the super guarantee reaching the legislated rate of 12 per cent in 2025 will help more Australians achieve a comfortable and dignified lifestyle in retirement, but account balance data indicate that many Australians still have a long way to go in achieving that goal,” the report wrote.

Leeanne Turner, ASFA interim chief executive, expressed her positive outlook on the super sector in delivering benefits to members.

“ASFA projections indicate that as it matures, the superannuation system will play a crucial role in improving retirement living standards in Australia,” she said.