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Finance Investment, Political

July’s savings boost will make retirement even more super

Super Members Council 4 mins read

This July 1, more than 9.2 million Australians will get a boost to their super – and the best thing is that it happens automatically.

The Super Guarantee rate rises from 11 per cent to 11.5 per cent, adding an extra $340 in employer-paid super contributions to the average Australian worker every year.

The Superannuation Guarantee 0.5 per cent rise could deliver the typical 30-year-old $17,570 more at retirement, when combined with next year’s legislated rise to 12 per cent the typical 30-year-old could have $34,000 more at retirement.

Super Members Council CEO Misha Schubert said the legislated Super Guarantee increases were key to delivering the quality of life at retirement that Australians deserved.

“Each of these increases might be small, but they are mighty – thanks to the power of compounding returns inside super over our working lives. This latest super boost will mean thousands more for millions of everyday Australians at retirement,” Ms Schubert said.

“In retirement, this money will fund extra basics - or perhaps a trip away, dinners out, the ability to spoil the grandkids, or even a bit more financial freedom and peace of mind.”

“Our super system is the envy of the world because it lifts the retirement savings of Australians, takes the pressure off the taxpayer-funded pension, delivers investment capital to Australian companies and – most importantly - gives millions of Australians a better life at retirement.”

Ahead of the July 1 super rise date, the Super Members Council analysed large-scale de-identified tax and ABS data to reveal who would get the increase – and found younger Australians and those on lower incomes will receive the increase in the greatest numbers.

The Super Members Council analysis found:

  • 9.27 million people will get a super boost this year – split almost evenly between men (4.7 million) and women (4.5 million)
  • More than half of those receiving the increase are under 40 – and more people in their 30s will get a boost to their retirement savings than any other age bracket (See Table 1 below)
  • A third of those receiving the increase earn less than $50,000 per year and almost 60% of those getting the increase earn less than $75,000 a year (Table 2)
  • The average West Australian will get an extra $367 this year, the highest average super boost of the States (Table 3)
  • 2.1 million professionals and almost 2.7 million tradies, machine operators and labourers will also receive the increase (Table 4)

The Super Guarantee is key to funding the retirement of Australia’s ageing population.

Before compulsory super was introduced in 1993, only 10 per cent of retirees listed super as an income. Now, about 90 per cent of people aged between 30 and 50 have super.

As more people start to retire with super, it significantly reduces pressure on the taxpayer-funded age pension. Already, the proportions of people on the full and part-pension are declining steadily and super pays out more in benefits than the pension. 

Despite a doubling of over 65s by 2063 and a trebling of those aged over-85, the Intergenerational Report shows the age pension will decline from 2.3 per cent of GDP to 2 per cent by 2062- 63, even as other costs associated with an ageing population soar.

Table 1: Winners of the Super Guarantee increasing by 11% to 11.5% - by age

 

Age

Population

Average yearly SG increase

% Share

20-29

2,372,800

$234

26%

30-39

2,533,100

$370

27%

40-49

1,937,100

$417

21%

50-59

1,522,700

$388

16%

60-69

796,600

$314

9%

70+

114,600

$222

1%

All

9,276,900

$341

100%

 Source: SMC analysis of 2019-20 2% tax file. Totals may not sum due to rounding.

Table 2: Winners of the Super Guarantee increasing by 11% to 11.5% - by income

 

Income

Population

Average yearly SG increase

% Share

$1 - $24,999

1,253,600

$58

14%

$25,000 - $49,999

1,913,800

$165

21%

$50,000 - $74,999

2,175,700

$278

23%

$75,000 - $99,999

1,533,000

$386

17%

$100,000 - $149,999

1,534,100

$540

17%

$150,000 - $199,999

528,800

$763

6%

$200,000+

337,900

$1,039

4%

All

9,276,900

$341

100%

 Source: SMC analysis of 2019-20 2% tax file. Totals may not sum due to rounding.

Table 3: Winners of the Super Guarantee increasing from 11% to 11.5% - by State

State

Population

Average yearly SG increase

% Share

ACT

128,700

$347

1%

NSW

2,995,300

$357

32%

NT

88,200

$346

1%

QLD

1,738,900

$321

19%

SA

632,300

$310

7%

TAS

190,800

$285

2%

VIC

2,458,900

$338

27%

WA

1,043,700

$367

11%

Australia

9,276,900

$341

100%

 Source: SMC analysis of 2019-20 2% tax file and ABS data. Totals may not sum due to rounding.

Table 4: Winners of the Super Guarantee increasing from 11% to 11.5% - by occupation type

Occupation

Population

Average yearly SG increase

Technicians and Trades Workers

1,115,000

$353

Labourers

968,000

$221

Machinery operators and drivers

611,200

$331

Professionals

2,122,700

$448

Managers

1,176,800

$473

Community and Personal Service Workers

1,027,500

$213

Clerical and Administrative Workers

1,194,600

$302

Sales workers

775,900

$233

Consultants, apprentices, and type not specified

281,600

$314

Occupation not listed/ Occupation not specified

3,600

$240

All

9,276,900

$341

 Source: SMC analysis of 2019-20 2% tax file and ABS data. Totals may not sum due to rounding.


About us:

The Super Members Council is a strong voice that advocates for more than 11 million Australians who hold more than $1.5 trillion in retirement savings in profit-to-member superannuation funds. We will protect and advance their interests throughout their lives, advocating on their behalf to ensure superannuation policy is stable, effective and equitable. 


Contact details:

Matthew Read: 0432 130 338, mread@smcaustralia.com

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