Using a comprehensive demographic and financial analytic tool, Deloitte Actuaries & Consultants modelled the future progress of the Australian superannuation industry over the next 20 years. Projecting a $9.5 trillion system, the report highlights its components, projects their growth, and comments on the market dynamics, demographic shifts, longevity challenges and adequacy of the world’s fourth largest super asset pool.
With current total assets of $2 trillion, the pool of the Australian superannuation system is projected to double to $4 trillion in the next 10 years and reach $9.5 trillion by 2035. Deloitte Superannuation Leader, Russell Mason, said in real terms this means that the contribution of superannuation assets will almost double from 120% of current annual Gross Domestic Product (AUD$1.6 trillion – the 12th largest GDP in the world) to more than 200% of GDP in the next 20 years.
“These cumulative projections reflect the legislated increases in the Superannuation Guarantee (SG) from 9.5% to 12% by July 2025, with the next increase (to 10%) scheduled from 1 July 2021. However, given the current low interest rate environment and volatile super fund returns, there are material sequencing risks for retirees,” Mason said. “Given that annual earnings have not been adequate to sustain living needs, or minimum drawdown requirements, many retirees have had to draw down greater proportions of their retirement savings, potentially curtailing previously projected growth in post-retirement assets which we now project to be $1.6 trillion in 2035.”
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