The retirement adequacy of working Australians has reached its lowest level since the global financial crisis (GFC), despite the benefits of the transition to a 12 per cent superannuation guarantee (SG), an industry index has found.
The AMP Retirement Adequacy Index fell almost 2 percentage points to 69.4 per cent, while projected retirement savings fell by 7 per cent to $492,000, which was enough to eliminate the projected gains expected from the introduction of the 12 per cent SG.
In comparison, the index reported a 71.4 per cent adequacy level for June 2010 and 71.9 per cent for December 2007.
The research found superannuation was the major driver of the falls, with the average worker’s total superannuation contributions dropping to the lowest level since 2006 at 12.3 per cent, mainly due to a fall in voluntary contribution rates.
It would leave the average Australian worker to retire on just under $49,000 per year, it said.
“The index shows salary sacrifice contributions have fallen across most age groups, particularly for older Australians who traditionally put more into their superannuation as they approach retirement, but are now restricted by caps on voluntary super contributions or worried about global markets,” AMP Financial Services managing director Craig Meller said.
“Consumer caution is also continuing to impact investment behaviour, post-GFC, according to the index, so it’s important our industry continues to focus on educating consumers about the benefits of super as a long-term savings strategy.”
While the index found contributions from older workers fell over the period, younger age groups had increased their overall voluntary contributions.
The index used data for the six months from June 2011 to December 2011 from more than 280,000 AMP corporate superannuation customers to predict retirement adequacy based on 65 per cent of an individual’s pre-retirement income.
