A 30-year-old Australian earning the average annual salary of $100,000 is projected to be $125,000 better off at retirement due to recent changes in the country’s superannuation system implemented over the past five years.
This forecast comes from the Australian Retirement Trust (ART), which highlighted that the mandatory employer superannuation contribution rate has gradually increased from 9.5% in 2020 to 12% starting July this year.
Anne Fuchs, ART’s Executive General Manager for Advocacy and Impact, explained that although the rise might seem small on fortnightly pay slips, the long-term impact is significant because of compound interest.
“Over a working lifetime, those small increases add up to hundreds of thousands of dollars,” she said, calling the change “reaching the summit of your own financial Everest.”
The superannuation guarantee, introduced in 1992 at just 3%, has become a cornerstone of Australia’s retirement system, helping Australians accumulate meaningful savings for the future.
The increase to 12% was initially proposed under the Rudd government and enacted during Scott Morrison’s tenure as Prime Minister.
Further research by the Association of Superannuation Funds of Australia found that a 30-year-old earning $75,000 annually could gain an additional $20,000 over time due to the recent 0.5% super contribution increase.
Meanwhile, Australia’s superannuation pool, valued at $4.2 trillion, is expected to become the world’s second-largest, surpassing the UK and Canada, within the next decade.
According to the Super Members Council, Australia’s super system is growing at twice the rate of other countries, with CEO Misha Schubert describing it as the “envy of the world.”
Australia is also the only OECD country where government spending on public pensions is declining, a trend projected to continue.
