Gerard Noonan explains why Australia’s superannuation scheme is a shining beacon amongst the world’s retirement schemes.
Australia’s super scheme is unlike any other in the world. Anticipating our ageing population and an unsustainable increase in pension payments, the Keating government introduced a scheme which required financial contributions from workers and employers. With generous tax concessions and 25 years under its belt, super funds are now worth over $1.4 trillion. Australians now have more money invested in managed funds per capita than any other economy.
That doesn’t mean there hasn’t been criticism. With the GFC still biting shares and Europe’s woes likely to contribute to a weakening market, many changes have been mooted by various quarters. Some are calling for more investment in local infrastructure while others are questioning whether there is an overinvestment in the sharemarket.
Gerard Noonan tells 3Q the reasons why super is well worth the investment.
Paul Schroder says the nature of our work is changing and the significance and reliance of super will increase — especially as we are all living longer.
In 2002, for every person aged 65 and over, there were about 5.3 people working. By 2043, this will decrease to about 2.5 people. That means less people doing more work to maintain health and other services for a burgeoning older population.
Simultaneously, the nature of work has changed so that there is more contract, casual and self employed workers. Australian Super’s Paul Schroder tells 3Q the great challenge for super is to ensure these people continue to make contributions to secure their retirement. Considering one in three children born today will reach 100, super should take equal priority to the family home when it comes to finances.
Matt Linden believes the Government’s latest changes will make super simpler, accessible and more relevant for those who’ve taken their eye off the ball.
How much do you know about your super fund? Who is responsible for looking after your savings? Where and how is your money invested? Who runs the fund?
If you don’t know the answer to many of these questions, you’re not alone. While super is now the biggest asset after the family home, few take an active interest in how it is managed. Because super is compulsory and locked away until retirement, most of us assume it will be there when we need it and focus our financial attention on the here and now.
But Industry Super Network’s Matt Linden tells 3Q the Government’s new measures will make it easier for members to access and understand information about their account.
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