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HALF of Australians won't have enough superannuation to live on by 2070, to rely on the pension

Half of young Australians starting out in the workforce will not have enough superannuation to retire on and millions will have to rely on the pension, new data reveals. 

Projection modelling shows that by 2070 almost 53 per cent of retirees will need to fund their own retirement, compared with the 31 per cent that currently do. 

On top of the sobering forecast is the looming effect of the more than $33billion withdrawn from superannuation through the coronavirus early release scheme and the hit super funds will take from shrinking investment markets. 

Half of young Aussies starting out in the workforce will have not have enough superannuation to retire on and millions will have to rely on the pension, new data reveals (file image)

Half of young Aussies starting out in the workforce will have not have enough superannuation to retire on and millions will have to rely on the pension, new data reveals (file image)  

On top of the sobering forecast is the looming effect of the more than $33billion withdrawn from superannuation through the coronavirus early release scheme and the hit super funds will take from shrinking investment markets (file image)

On top of the sobering forecast is the looming effect of the more than $33billion withdrawn from superannuation through the coronavirus early release scheme and the hit super funds will take from shrinking investment markets (file image) 

The outlook shows that the number of Australians on the full age pension is expected to reduce to about 20 per cent in 2070 from the current 49.1 per cent  – meaning more Australians will be relying on their own money but millions will still have to rely on the pension. 

The modelling was prepared by actuaries Rice Warner with executive director Michael Rice adding the government may introduce more tax incentives to get people injecting more into their super but the take-up would likely not be widespread. 

In an effort to offset the damage government and the industry are also negotiating over whether to life compulsory super contributions to 10 per cent in July 2021 and then to 12 per cent by 2025. 

The current level of compulsory super contributions is set at 9.5 per cent. 

Financial strategist Theo Marinis said that super was designed to work in conjunction with the age pension, reducing the burden on taxpayers, but also  to boost wealthier retirees incomes whose spending boost the economy. 

He advised young workers – who have been the most likely to withdraw money using the early release scheme – to try and payback as much as they could.  

‘If you’ve taken money out, think of it as a loan from yourself, and repay it back when you can. It’s not somebody else’s money – it’s yours,’ Mr Marinis told The Daily Telegraph. 

‘If you’re on a low income you will never build up enough to be totally self-reliant but you will be better off than just the pension,’ he said. 

The dire forecast is in stark contrast to the paypackets of the executives of the superannuation fund industry, which is worth trillions. 

Among the highest paid are AustralianSuper Chief Investment Officer Mark Delaney who earns $1.63million a year and his UniSuper equivalent John Pearce who is on even more at $1.73million a year. 

Among the highest paid are AustralianSuper Chief Investment Officer Mark Delaney who earns $1.63million (pictured)

Among the highest paid are John Pearce from UniSuper who is on $1.73million a year (pictured)

Among the highest paid superannuation fund executives are AustralianSuper Chief Investment Officer Mark Delaney who earns $1.63million a year and his UniSuper equivalent John Pearce who is on even more at $1.73million a year.

A recent investigation by Newscorp found that Australians were collectively spending more on superannuation fees than on power bills. 

Assistant Minister for Superannuation Jane Hume said the government was ‘carefully considering the economic environment’ as they negotiate whether to increase compulsory super contributions.

‘I am aware of broad commentary from the Reserve Bank who’ve said that continuing the super guarantee increase would be bad for employment, to [others] who said that for people on lower incomes who struggle to meet the basics of life, the benefits of the rise in super guarantee are ‘not so clear’,’ she said.

‘People’s jobs and livelihoods are at risk … we know that the best contributor to security in retirement is a job.’ 

‘As the legislation doesn’t come into effect until next year there is no haste to make any decisions, and we hope that by then we are looking at a very different economic environment,’ she said. 

Assistant Minister for Superannuation Jane Hume said the government was 'carefully considering the economic environment' as they look to increase compulsory super contributions (file image)

Assistant Minister for Superannuation Jane Hume said the government was ‘carefully considering the economic environment’ as they look to increase compulsory super contributions (file image) 

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