Aussie super system set to climb global ranks over next decade: SMC
Australian retirement savings are on track to becoming the second largest in the world, rising from fourth by 2031.
An analysis by the Super Members Council (SMC) has revealed that Australians' retirement savings will soon become the second largest globally by 2031.
Super savings in Australia are currently ranked in fourth place behind the British, Canadian and American super systems.
Based on the research, SMC determined that Australian pension assets were set to surpass the UK in 2030 and Canada by 2031 before settling second behind the US.
SMC said the sector's rising global investment capability gave Australia “stronger global clout” as a delegation of super leaders headed to the US to strengthen ties and search for investment deals.
Australia’s rising super balances were outlined to have reduced government spending on the age pension, which in turn was taking pressure off all taxpayers.
Misha Schubert, CEO of SMC, said the growth of the Australian super system had helped millions of everyday Australians reach a more financially secure future and the system was now “the envy of the world.”
“Australia has the fastest growing super system globally – twice the rate of international peers. We’re the only OECD country where spending on government-funded pension payments is falling and will continue to fall,” she said.
“Importantly, the system settings – automatic super payments, near universal coverage and preservation of savings have helped Australians set aside world leading retirement nest eggs.”
Based on the compulsory and universal nature of Australia’s super system and strong preservation rules, the strongest net cash flow system globally was in Australia with around $3.14 billion in contributions invested each week.
SMC projected the total system contributions to reach $141 billion for the 2024–25 financial year.
Research by SMC also revealed that between 2001 to 2023, Australia’s cumulative contribution inflows reached 180 per cent of GDP, which was the highest among OECD countries as well as well above the OECD average.
In addition, Australia was noted to be the only OECD country whose spending on the age pension system was projected to fall from 2.5 per cent to 2.0 per cent by 2060.
Also, by 2062, the proportion of Australians receiving the full age pension was estimated to more than halve from 44 per cent to 21 per cent.
Schubert said the scale of Australia’s international investment pool had strengthened Australia’s global influence and security by deepening our economic and trade links with key global players.
This was linked to the fact that funds under management in Australia were currently $4.1 trillion, exceeding any single sovereign wealth fund such as Norway and China.
“A delegation of Australian super funds are currently in the US looking for new investment opportunities to further grow Australians’ super savings,” Schubert said.
“Having one of the largest reliable pools of long-term stable capital creates new opportunities for investments to deliver strong returns for the retirement nest eggs of Australians. Through super, millions of Australian workers own a profit-slice of world-leading publicly listed companies, toll roads, data centres, shopping centres and renewable energy projects.”
Schubert added that the success of Australia’s super system highlighted the effectiveness of its system settings which was underpinned by the safeguards of super being universal, compulsory and preserved until retirement.
“These safeguards – especially that people’s investments are preserved until retirement – are the secret sauce of super, giving Australians in their millions the power of compound returns over decades,” she said.
“Super is a great Australian success story. It gives millions of everyday Australians the chance to live the life they want in retirement, while saving the Budget money over the long-term. It’s a win-win.”
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