australia's superannuation system
TRANSCRIPT
1 © 2014 Deloitte Touche Tohmatsu
Young Professionals CPA Discussion
Group
8 October 2014
Stephen Huppert
Partner, Deloitte
2 © 2014 Deloitte Touche Tohmatsu 2 © 2014 Deloitte Touche Tohmatsu
Superannuation = saving for retirement
The Australian retirement income system comprises three elements, which have become
known as the three pillars:
Superannuation is tax advantaged savings but to receive that tax advantage, contributions
must be paid into a complying superannuation entity.
Pillar 1 Age pension
Pillar 2 Compulsory superannuation contributions.
Pillar 3 Voluntary superannuation contributions and other savings
3 © 2014 Deloitte Touche Tohmatsu 3 © 2014 Deloitte Touche Tohmatsu
Total superannuation assets now over $1.7 trillion…
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
1997 2000 2003 2006 2009 2012 2015 2018 2021 2024 2027 2030 2033
$ b
illi
on
s
APRA market statistics to
30 June 2012
APRA market statistics to
30 June 2012
4 © 2014 Deloitte Touche Tohmatsu 4 © 2014 Deloitte Touche Tohmatsu
…and projected to pass $7 trillion within 20 years
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
1997 2000 2003 2006 2009 2012 2015 2018 2021 2024 2027 2030 2033
$ b
illi
on
s
APRA market statistics to
30 June 2012
Deloitte projections from
1 July 2012
~1.0 x GDP
~1.8 x GDP
5 © 2014 Deloitte Touche Tohmatsu 5 © 2014 Deloitte Touche Tohmatsu
Projected assets
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032
$ b
illi
on
6 © 2014 Deloitte Touche Tohmatsu 6 © 2014 Deloitte Touche Tohmatsu
Projected assets pre & post retirement
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032
$ b
illi
on
Post-retirement
Pre-retirement
7 © 2014 Deloitte Touche Tohmatsu 7 © 2014 Deloitte Touche Tohmatsu
Assets by segment as a percentage of total
Not for profit: 39% Retail: 28% SMSF: 33%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Jun-97
Jun-99
Jun-01
Jun-03
Jun-05
Jun-07
Jun-09
Jun-11
Corporate
Industry
Public sector
Retail
SMSF
8 © 2014 Deloitte Touche Tohmatsu 8 © 2014 Deloitte Touche Tohmatsu
Growth of SMSFs
0.0
100.0
200.0
300.0
400.0
500.0
600.0
0
100,000
200,000
300,000
400,000
500,000
600,000
1997 1999 2001 2003 2005 2007 2009 2011 2013
To
tal assets
($b
n)
Nu
mb
er
of
fun
ds
Number of funds (LH axis)
Total assets (RH axis)
Date Number
of funds
Total
assets
($bn)
Jun 2006 309,088 203.2
Jun 2007 350,142 312.2
Jun 2008 375,738 321.4
Jun 2009 399,742 326.2
Jun 2010 414,956 366.2
Jun 2011 442,987 423.2
Jun 2012 478,263 439.0
Jun 2013 512,375 508.0
9 © 2014 Deloitte Touche Tohmatsu 9 © 2014 Deloitte Touche Tohmatsu
Industry fund segment (30 June 2013)
Source: APRA
0
10
20
30
40
50
60
70
1 5 9 13 17 21 25 29 33 37 41 45 49
Fu
nd
assets
($
bn
)
75%
3%
22%
Top 10
Th
e R
est
10 © 2014 Deloitte Touche Tohmatsu 10 © 2014 Deloitte Touche Tohmatsu
Life expectancy and pension age
40
45
50
55
60
65
70
75
80
85
90
1881-1890 1946-1948 1975-1977 1994-1996 1999-2001 2004-2006 2010-2012
Pension Age
Life Expectancy at Birth
Life Expectancy at 65
Males, ABS Life Tables
11 © 2014 Deloitte Touche Tohmatsu © 2013 Deloitte Touche Tohmatsu
11 © 2014 Deloitte Touche Tohmatsu
12 © 2014 Deloitte Touche Tohmatsu 12 © 2014 Deloitte Touche Tohmatsu
Future life expectancy and pension age
60
65
70
75
80
85
90
95
2010 2015 2020 2025 2030 2035 2040 2045 2050 2055
Life expectancy at 65 Current Pension Age
NCOA Proposed Pension Age Govt Proposed Pension Age
Govt Proposed Pension Age2 ?
13 © 2014 Deloitte Touche Tohmatsu 13 Compliance Considerations © 2013 Deloitte Touche Tohmatsu
13 © 2014 Deloitte Touche Tohmatsu
Ownership of the assets
2013 2023 2033
14 © 2014 Deloitte Touche Tohmatsu 14 Compliance Considerations © 2013 Deloitte Touche Tohmatsu
14 © 2014 Deloitte Touche Tohmatsu
Trade offs in providing for old age
15 © 2014 Deloitte Touche Tohmatsu 15 © 2014 Deloitte Touche Tohmatsu
We must do better for retiring Australians
Males Females
Modest lifestyle $340,000 $370,000
Comfortable lifestyle $610,000 $680,000
Amounts needed at age 65 (2014 dollars)
Males Females
Age: 60 – 65 $114,000 $94,000
Age: 65+ $151,000 $133,000
Average account balances (June 2013 APRA data)
16 © 2014 Deloitte Touche Tohmatsu © 2013 Deloitte Touche Tohmatsu
16 © 2014 Deloitte Touche Tohmatsu
17 © 2014 Deloitte Touche Tohmatsu 17 © 2014 Deloitte Touche Tohmatsu
Pillars of a retirement income system
Pillar 1 Age pension
Pillar 2 Compulsory superannuation contributions.
Pillar 3 Voluntary superannuation contributions and other savings
Pillar 4 Extend work life, enable more part-time work, equity release
18 © 2014 Deloitte Touche Tohmatsu © 2013 Deloitte Touche Tohmatsu
18 © 2014 Deloitte Touche Tohmatsu
Retirement
Adequacy
Delay
Retirement
Education
& Advice
Products &
Investments
Increase
Contributions
19 © 2014 Deloitte Touche Tohmatsu 19 © 2014 Deloitte Touche Tohmatsu
The strategic objective of a superannuation fund is…
Maximise Members’
Retirement Outcomes
Net Investment Returns
Operating Costs
Products & Services
Member Behaviour
20 © 2014 Deloitte Touche Tohmatsu 20 © 2014 Deloitte Touche Tohmatsu
The strategic objective of a superannuation fund is…
Maximise Members’
Retirement Outcomes
Net Investment Returns
Operating Costs
Products & Services
Member Behaviour
21 © 2014 Deloitte Touche Tohmatsu 21 © 2014 Deloitte Touche Tohmatsu
Contact
Stephen Huppert
Partner
Deloitte
@stephenhuppert
http://www.deloitte.com/au/superadequacy
22 © 2014 Deloitte Touche Tohmatsu © 2013 Deloitte Touche Tohmatsu
22 © 2014 Deloitte Touche Tohmatsu
About Deloitte
Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients
spanning multiple industries. With a globally connected network of member firms in 140 countries,
Deloitte brings world class capabilities and deep local expertise to help clients succeed wherever they
operate. Deloitte's 150,000 professionals are committed to becoming the standard of excellence.
Deloitte's professionals are unified by a collaborative culture that fosters integrity, outstanding value
to markets and clients, commitment to each other, and strength from diversity. They enjoy an
environment of continuous learning, challenging experiences, and enriching career opportunities.
Deloitte's professionals are dedicated to strengthening corporate responsibility, building public trust,
and making a positive impact in their communities.
Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, and its network of
member firms, each of which is a legally separate and independent entity. Please see
www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche
Tohmatsu and its member firms.
About Deloitte Australia
In Australia, Deloitte has 12 offices and over 4,500 people and provides audit, tax, consulting, and
financial advisory services to public and private clients across the country. Known as an employer
of choice for innovative human resources programs, we are committed to helping our clients and
our people excel. Deloitte's professionals are dedicated to strengthening corporate responsibility,
building public trust, and making a positive impact in their communities. For more information,
please visit Deloitte’s web site at www.deloitte.com.au.
Confidential This document and the information contained in it is confidential and should not be
used or disclosed in any way without our prior consent.
Liability limited by a scheme approved under Professional Standards Legislation.
General information only
This presentation is provided as general information only and does not consider your specific objectives, situation or needs. You should not rely on the information in this presentation or disclose it or refer to it in
any document. We accept no duty of care or liability to you or anyone else regarding this presentation and we are not responsible to you or anyone else for any loss suffered in connection with the use of this
presentation or any of its content.
© Deloitte Touche Tohmatsu, 2013. All rights reserved.