Reliance on age pension steadily dropping, report shows
The proportion of newly retired Australians who rely on the age pension is falling, according to a recent analysis report, with only 45 per cent of those aged 66 accessing the pension.
A recent Retirement Income Research report released by Challenger shows that superannuation is reducing reliance on the age pension, with only 25 per cent of new retirees aged 66 drawing the full age pension in 2018, and 45 per cent accessing the pension either in part or in full.
The research report does show that this figure jumps significantly among older demographics, with over 80 per cent of 80-year-olds accessing some form of pension.
However, across all age-eligible retirees, only 42 per cent currently receive the full age pension.
“This is an overall average and includes retirees in their 90s who have never had super,” the report stated.
The report shows that the average consolidated super balance for a person with super aged 60–64 in Australia is now over $300,000. Within this age cohort, the average male balance is $336,000 and the average female balance is $278,000.
The report stated that the success of superannuation in building up savings for retirement is not limited to one sector or only a few funds.
“While some funds have been particularly successful in building balances for their members approaching retirement, the rising tide of time in the system is lifting average consolidated balances across the system,” the report said.
The report also noted that the majority of large APRA funds have an average retirement phase member balance above $258,500.
“This is significant in that $258,500 is the lower threshold for the assets test for the age pension. Single retirees with balances over $160,000 would not be on a full age pension, due to the impact of the means test on the income deemed to be earned from their super,” it explained.
“For those with balances above $258,500, the harsher assets test kicks in with the 7.8 per cent per annum taper rate. This means that the average large APRA fund member in the retirement phase does not get the full age pension.”
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.