Superannuation has acted as a buffer against inflationary pressures on the retirement income system, with the cost of living for retirees climbing at a rate slightly less than that of inflation, according to the Association of Superannuation Funds of Australia (ASFA).
ASFA deputy chief executive Glen McCrea said increases in the cost of food, transport and energy over the past quarter were being driven by causes outside Australia, but retirees here were in a stronger retirement position than global peers due to “robust superannuation system and retirement pillar settings”.
“The global energy crisis, raw material scarcity and supply chain disruptions caused by ongoing COVID lockdowns in China are converging to pose significant inflationary challenges globally and here at home,” McCrea said.
“We can take some solace from the fact that the investment we’ve made in superannuation over the last three decades is acting as a buffer in the face of these strong headwinds.
“Governments in Europe and the UK are actively considering raising the retirement age or slashing the amount of pension retirees receive as they struggle to deal with the global economic challenges they are facing.
“In contrast, the age pension remains affordable for the government in Australia where, in aggregate, retirees on average have larger private retirement savings balances than in most countries in the world.
“This helps cover costs during tougher times, providing a brighter outlook for Australian retirees than is the case for their international counterparts.”
The superannuation industry peak body stated its Retirement Standard figures for the September quarter increased in line with inflation across that period, but were slightly lower than inflation for the year to the end of September.
According to the association, couples aged around 65 will need to spend $68,014 a year and singles will need to spend $48,266 for a ‘comfortable retirement’, an increase of 1.9 per cent on the previous quarter.
Over the year to September 2022, the amount needed for a couple to fund a comfortable retirement rose by 6.6 per cent and for singles by 6.7 per cent, slightly lower than the annual inflation rate of 7.3 per cent.
