Trustees of the country’s largest super funds have panned claims that Australians will need superannuation nest eggs of at least $1 million to fund their retirements.
Earlier this year, several leading superannuation industry leaders including Jeremy Cooper, the head of Challenger Group’s retirement incomes division, suggested that $1 million might not be enough to for a comfortable retirement.
“Assumptions and assertions that $500,000, or even $1 million, in super, in the current environment, will guarantee a comfortable retirement are suspect,” Mr Cooper wrote in the Australian Financial Review in April.
However, a report released this week by the Australian Institute of Superannuation Trustees rejects this view, arguing that Australians can realise an adequate retirement without a $1 million super balance.
AIST chief Tom Garcia said recent claims that super balances of $1 million or more were needed for a comfortable retirement were causing unnecessary fear among older Australians approaching retirement.
“It’s time to get real about super and ensure all Australians have a far better understanding of the sort of income they can expect in retirement,” Mr Garcia said.
“The reality is that most Australians – including most of those starting out in the workforce today – will not retire with the equivalent of $1 million in super.
“We need to stop focusing on the needs of a privileged few and start talking about how relatively small balances of super can still make a big difference to the quality of life in retirement.”
For most Australians nearing retirement, the AIST believes that superannuation needs to be understood as a supplement to the age pension.
The research report found that a super balance of $150,000 would add $163 a week to a pensioner’s weekly income.
AustralianSuper chief executive Ian Silk said members were getting mixed messages about the sector that was causing disengagement and uncertainty.
“The key point for people to appreciate is that even relatively modest super balances can make a meaningful contribution to an adequate retirement income when combined with the age pension,” Mr Silk said.
“So rather than despair, workers with $100,000, or even $50,000 in their super accounts should take heart.
“The super savings they’ve accumulated give them options they might not realise.”
The AIST paper estimates that a typical balance of those approaching retirement in an industry fund is about $100,000 and that less than five out of every 1000 super fund members have $1 million or more in their super.