The Super Members Council said compulsory superannuation has been a massive win for retirees, especially low and middle-income earners. (Source: Getty) <\/p>\n
Compulsory superannuation<\/a> has been praised for leaving low and middle-income retirees<\/a> more than $11,000 better off in their twilight years. It’s been around for more than three decades and has now morphed into what’s called the Superannuation Guarantee<\/a> (SG).<\/p>\n While it started at only 3 per cent of a worker’s salary, it has steadily increased in recent years<\/a> and is now at 12 per cent<\/a>. Super Members Council (SMC) CEO Misha Schubert said the current system is helping transform the lives of people across different wealth groups.<\/p>\n \u201cAustralia\u2019s super system is lifting the retirement incomes for millions of everyday Australians<\/a>, ensuring they have more money for the things they love and need,\u201d she said.<\/p>\n \u201cWithout super and with Australia\u2019s population ageing, the Age Pension would be under enormous strain, leaving the Budget worse off and less money to spend on things like health, education, roads and rail.\u201d<\/p>\n \u201cSuper is one of Australia\u2019s great social and economic success stories. It\u2019s time to build on that success and ensure it works even better for those who need it most.\u201d<\/p>\n However, a Yahoo Finance poll has revealed how the cost-of-living crisis<\/a> has affected people’s outlooks on their retirement nest eggs.<\/p>\n Interestingly, 65 per cent of respondents felt they won’t have enough super in their accounts to retire comfortably.<\/p>\n A separate survey of more than 2,500 people found 81 per cent believed they would need to go on the Age Pension to survive.<\/p>\n Do you have a story? Email stew.perrie@yahooinc.com<\/p>\n When the Superannuation Guarantee (SG) was first introduced, only the wealthiest 10 per cent of households listed super as a source of income in their retirement.<\/p>\n But three decades later, the SMC’s first-of-its-kind modelling has revealed how beneficial the system has been for households on the other end of the spectrum.<\/p>\n About 90 per cent of people aged between 30 and 50 have super, and middle and low-income retirees have been the “biggest beneficiaries” of the SG policy.<\/p>\n Those in the middle wealth group were receiving an average of $20,800 per year in super income compared to similar retirees two decades ago, when the SG rate was at 9 per cent.<\/p>\n When you accounted for lower Age Pension entitlements, these middle wealth retirees now end up being $11,388 per year better off compared to generations before them.<\/p>\n Story Continues <\/p>\n As a result of the SG, the number of people in their 70s with superannuation income has tripled over the past 20 years.<\/p>\n SMG estimated that if compulsory superannuation didn’t exist, an extra 512,000 people would be forced to rely on the Age Pension.<\/p>\n This could have placed serious pressure on the Centrelink payment system, and would be costing taxpayers $12 billion in 2026-27.<\/p>\n On July 1, the SG rate went from 11.5 per cent to 12 per cent.<\/p>\n It was the last mandated 0.5 per cent increase until at least 2027, and the rate has been steadily increasing since the start of the decade.<\/p>\n The SMC found that this modest increase will mean an extra $317 in super contributions will be paid to the average Australian worker this financial year.<\/p>\n While it might not sound like much, a typical 30-year-old would have an extra $22,000 in their account as a result.<\/p>\n When you add up all the increases over the last decade from 9 per cent to 12 per cent, a worker can now retire with $132,000 more.<\/p>\n \u201cThis boost to retirement savings will help fund the things that matter most \u2013 more help with paying the bills, spending time and making memories with the family, trips away and financial security,\u201d Schubert said.<\/p>\n \u201cMore super means more freedom, more choices and more opportunities to do the things you love.\u201d<\/p>\n Get the latest Yahoo Finance news – follow us on Facebook<\/a>, LinkedIn<\/a> and Instagram<\/a>.<\/p>\n About 90 per cent of people aged between 30 and 50 have super, and middle and low-income retirees have been the “biggest beneficiaries” of the SG policy. (Source: Getty) \u00b7 pamspix via Getty Images <\/p>\n