Super system a ‘major success’, retirees say

The super system has been a “major success” with a majority of retirees saying compulsory super has given them a comfortable retirement, according to a new survey.

The survey, carried out by National Seniors Australia and Challenger in the run-up to the 30th anniversary of compulsory super, found 90% of retirees used super as their main source for accumulating retirement capital.

John McCallum, chief executive and director of research at National Seniors, said: “In short, compulsory super delivers what it was designed for — to provide retirees with an income that maintains their working life standard of living.”

The report has revealed:

• 75% of retirees surveyed are satisfied with their financial security
• 85% of people had accumulated super for their retirement. This proportion was lower for women (82%) compared to men (88%)
• Around half of those surveyed wanted to preserve some of their retirement capital, but spend some of it to fund their retirement
• The intention to maintain most or all of the capital was significantly more likely for men or those who wanted to help family or friends access aged care
• The most common reason for maintaining retirement capital was for medical and health needs
• While 81% owned their own home and 11% owned a home with a mortgage, just 2% used their home equity in retirement
• Two-thirds said it was important to leave their home as a bequest

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Aaron Minney, head of retirement income research at Challenger, said the findings show super has been a “major success” but highlighted the reluctance of retirees to increase the drawdown of their super to further improve their lifestyle.

The ‘retirement income covenant’ came into force on 1 July and requires all large super funds to have a strategy for managing some of the unique financial risks facing retirees, with a view to giving them more sustainable income for life.

“The National Seniors survey shows that retirement income reforms could not have come at a better time,” Minney said. “Many retirees cut back on their lifestyle rather than spending their savings. Hoarding the nest egg means they are missing out on some of what they could enjoy.”