Australian superannuation account balances appear to have achieved a critical stage in their recovery from the global financial crisis, having moved back to levels not seen since 2007.
That is the bottom line analysis of the AMP Retirement Adequacy Index released this week, which revealed superannuation balances increased 11.4 per cent from $40,132 to $44,690 — a level higher than their 2007 peak.
However superannuation fund member sentiment appears to be lagging the buoyancy of their account balances. The index revealed that while overall balances were up reflecting a stronger economy and higher investment returns, superannuation contributions were still below 2007 levels at 12.5 per cent compared to 13 per cent.
It found that discretionary contribution rates via salary sacrifice were at their lowest levels since the index began, with the biggest falls seen in the 45 to 49 age group and the 50 to 54 age groups.
Commenting on the index results, AMP Financial Services managing director Craig Meller said the findings suggested some Australians who had decreased their superannuation contributions risked compromising their retirement goals.
He said that in the aftermath of the global financial crisis (GFC) people were naturally more cautious but superannuation remained the most effective long-term savings vehicle.
While suggesting continuing nervousness on the part of some fund members, the AMP index also pointed to some good news with overall retirement adequacy up to 71.4 per cent, suggesting that today’s workers can no expect to retire on an annual income of $46,746 a year — a 2.3 per cent increase over the previous six months.
The index also indicated people intended working longer than before with the retirement age increasing from 63.4 years to 64.4 years.
Access Economic director Chris Richardson said it was likely the increased retirement age reflected the current environment in which people were delaying retirement in response to the GFC.
“Whether this trend will continue will depend not only on economic factors but how the next generation of retirees view ageing,” he said.
