About 80% of retirees need to rely on the government-funded Age Pension for part of their retirement income, despite 25 years of the country's compulsory superannuation system being in operation.
An analysis of Department of Social Services (DSS) welfare applications obtained by The Weekend Australian reveals half of all couples retire on to a part-pension holding investment assets, excluding their home, of A$500,000 (US$398.000) or more.
One in five retirees receiving the Age Pension or other welfare benefits also access their superannuation pension, while a similar number retain an investment property.
Fund management group Challenger’s government relations head, David Cox, said this was not a failure of the superannuation system. “There are a lot of people who, because the super system isn’t mature, don’t have high balances,” he said.
The data analysis — by CSIRO’s digital research arm Data61, together with Monash University and Challenger — shows most people who retire with small superannuation savings take them as a lump sum, either to pay off a home mortgage or to put into a savings account.
There are about a million retirees with between A$10,000 and A$50,000 in savings accounts while another 1.4 million retirees have less than that. The analysis also reveals that a majority of people with modest savings keep them in lower paying term deposits rather than superannuation accounts.
The 2015 InterGenerational Report warned that the share of the population dependent on an Age Pension would barely change over the next 40 years although the share on part-pensions would rise. It said the cost to the budget could soar from 2.7% of GDP to 3.6% unless the indexation rate of Age Pensions was cut and the pension age increased to 70 years. It currently is 65 and a half years.