Retirement adequacy now in question

Australia needs to look at improving its superannuation regime to ensure that it can deliver retirement incomes adequacy in the future, according to KPMG.

KPMG superannuation practice partner Sean Hill said that in the past 12 months, projects in respect to the size of Australia’s total pool of superannuation funds over the next 10 years had declined from estimates of above $3 trillion to estimates more in the range of $2.5 trillion.

“This decline reinforces the urgency of measures to address the adequacy of superannuation entitlements for Australian retirees,” Hill said.

He said that while Australia was regarded as leading the world with respect to retirement income adequacy, the latest projects with respect to the total superannuation pool should give pause for thought and were instructive that the nation could not afford to rest on its laurels.

Hill said that the projected outcomes that arise from a relatively moderate dampening in earnings expectations meant that Australia needed to continue to seek out ways to enhance adequacy.

“Demographic change, including the long-term forecast decline in the proportion of the community in the workforce, will significantly impact contributions to superannuation,” he said. “This raises the question: will the current superannuation system be adequate for people when they retire?”