Winners & losers

Deloitte report ‘Dynamics of the Australian superannuation system – The next 20 years: 2013-2033’ highlights that if you're 30 today (with 35 years of super to come) you won't enjoy a comfortable retirement unless you add an extra 5% each year.

It was good to see the need to make extra contributions attracted media attention.

 

 

Headlines focused on the message that ‘even a super balance of $1 million won’t be enough for a comfortable retirement’ due to the report’s conclusion that, for a comfortable retirement, a 30-year-old male would need retirement savings in 2048 (at age 65) of $1.58 million. A 30-year-old female fares even worse, due to her longer life expectancy, and would need $1.76 million.  

Importantly, the report estimated that a 30-year-old male will need to contribute an extra 5.4%, and a female 7.5%, to their super to secure a comfortable retirement.

Behind these catchy news headlines, there are additional important messages for all players in the Australian superannuation industry.

The Deloitte report delivered insights on:

  •           The growth of the Australian superannuation system
  •           Pre and post-retirement sectoral battlegrounds
  •           The impact of the Global Financial Crisis
  •           Generational shifts
  •           Adequacy

A number of strategic issues for participants in the sector were addressed, including the following:

  •           The MySuper environment is likely to see industry and retail funds bunch together on costs and will therefore be forced to compete on other dimensions such as performance, insurance, services and brand.
  •           The market is changing, with all participants requiring a greater focus on acquisition of individual customers. The retail funds (including the ‘big 4’ banks and AMP) will have a significant advantage here when compared to the industry funds, which will need to build capability quickly.
  •           The competition from the SMSF sector will not go away. Retail and industry funds will need to employ new and more effective strategies to stem the flow of members with large balances to the SMSF sector.
  •           The superannuation industry will continue to change, there will be winners and losers, and the big winners will be those that are quickest to see the opportunities and execute their strategies most effectively.

Click here to access the full Deloitte Report.