Australia's Superannuation System

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© 2014 Deloitte Touche Tohmatsu
Young Professionals CPA Discussion Group
8 October 2014
Stephen Huppert Partner, Deloitte

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Superannuation = saving for retirement
The Australian retirement income system comprises three elements, which have become known as the three pillars:
Superannuation is tax advantaged savings but to receive that tax advantage, contributions must be paid into a complying superannuation entity.
Pillar 1
Age pension
Pillar 2
Compulsory superannuation contributions.
Pillar 3
Voluntary superannuation contributions and other savings

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Total superannuation assets now over $1.7 trillion…
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
1997
2000
2003
2006
2009
2012
2015
2018
2021
2024
2027
2030
2033
$ billions
APRA market statistics to 30 June 2012

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…and projected to pass $7 trillion within 20 years
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
1997
2000
2003
2006
2009
2012
2015
2018
2021
2024
2027
2030
2033
$ billions
Deloitte projections from 1 July 2012
~1.0 x GDP
~1.8 x GDP

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Projected assets
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
$ billion

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Projected assets pre & post retirement
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
$ billion
Post-retirement
Pre-retirement

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Assets by segment as a percentage of total
Not for profit: 39%
Retail: 28%
SMSF: 33%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jun-97
Jun-99
Jun-01
Jun-03
Jun-05
Jun-07
Jun-09
Jun-11
Corporate
Industry
Public sector
Retail
SMSF

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Growth of SMSFs
0.0
100.0
200.0
300.0
400.0
500.0
600.0
0
100,000
200,000
300,000
400,000
500,000
600,000
1997
1999
2001
2003
2005
2007
2009
2011
2013
Total assets ($bn)
Number of funds
Number of funds (LH axis)
Total assets (RH axis)
Date
Number of funds
Total assets ($bn)
Jun 2006
309,088
203.2
Jun 2007
350,142
312.2
Jun 2008
375,738
321.4
Jun 2009
399,742
326.2
Jun 2010
414,956
366.2
Jun 2011
442,987
423.2
Jun 2012
478,263
439.0
Jun 2013
512,375
508.0

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Industry fund segment (30 June 2013)
Source: APRA
0
10
20
30
40
50
60
70
1
5
9
13
17
21
25
29
33
37
41
45
49
Fund assets ($bn)
75%
3%
22%
Top 10
The Rest

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Life expectancy and pension age
40
45
50
55
60
65
70
75
80
85
90
1881-1890
1946-1948
1975-1977
1994-1996
1999-2001
2004-2006
2010-2012
Pension Age
Life Expectancy at Birth
Life Expectancy at 65
Males, ABS Life Tables

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Future life expectancy and pension age
60
65
70
75
80
85
90
95
2010
2015
2020
2025
2030
2035
2040
2045
2050
2055
Life expectancy at 65
Current Pension Age
NCOA Proposed Pension Age
Govt Proposed Pension Age
Govt Proposed Pension Age2
?

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13
Compliance Considerations
Ownership of the assets
2013
2023
2033

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Compliance Considerations
Trade offs in providing for old age

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We must do better for retiring Australians
Males
Females
Modest lifestyle
$340,000
$370,000
Comfortable lifestyle
$610,000
$680,000
Amounts needed at age 65 (2014 dollars)
Males
Females
Age: 60 – 65
$114,000
$94,000
Age: 65+
$151,000
$133,000
Average account balances (June 2013 APRA data)

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Pillars of a retirement income system
Pillar 1
Age pension
Pillar 2
Compulsory superannuation contributions.
Pillar 3
Voluntary superannuation contributions and other savings
Pillar 4
Extend work life, enable more part-time work, equity release

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Retirement Adequacy
Delay Retirement
Education & Advice
Products & Investments
Increase Contributions

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The strategic objective of a superannuation fund is…
Maximise Members’ Retirement Outcomes
Net Investment Returns
Operating Costs
Products & Services
Member Behaviour

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The strategic objective of a superannuation fund is…
Maximise Members’ Retirement Outcomes
Net Investment Returns
Operating Costs
Products & Services
Member Behaviour

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Contact
Stephen Huppert
Partner
Deloitte
sthuppert@deloitte.com.au
@stephenhuppert
http://www.deloitte.com/au/superadequacy

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About Deloitte
Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in 140 countries, Deloitte brings world class capabilities and deep local expertise to help clients succeed wherever they operate. Deloitte's 150,000 professionals are committed to becoming the standard of excellence.
Deloitte's professionals are unified by a collaborative culture that fosters integrity, outstanding value to markets and clients, commitment to each other, and strength from diversity. They enjoy an environment of continuous learning, challenging experiences, and enriching career opportunities. Deloitte's professionals are dedicated to strengthening corporate responsibility, building public trust, and making a positive impact in their communities.
Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms.
About Deloitte Australia
In Australia, Deloitte has 12 offices and over 4,500 people and provides audit, tax, consulting, and financial advisory services to public and private clients across the country. Known as an employer of choice for innovative human resources programs, we are committed to helping our clients and our people excel. Deloitte's professionals are dedicated to strengthening corporate responsibility, building public trust, and making a positive impact in their communities. For more information, please visit Deloitte’s web site at www.deloitte.com.au.
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Liability limited by a scheme approved under Professional Standards Legislation.
General information only
This presentation is provided as general information only and does not consider your specific objectives, situation or needs. You should not rely on the information in this presentation or disclose it or refer to it in any document. We accept no duty of care or liability to you or anyone else regarding this presentation and we are not responsible to you or anyone else for any loss suffered in connection with the use of this presentation or any of its content.
© Deloitte Touche Tohmatsu, 2013. All rights reserved.

Australia's Superannuation System

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