australia's superannuation system

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1 © 2014 Deloitte Touche Tohmatsu Young Professionals CPA Discussion Group 8 October 2014 Stephen Huppert Partner, Deloitte

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Page 1: Australia's Superannuation System

1 © 2014 Deloitte Touche Tohmatsu

Young Professionals CPA Discussion

Group

8 October 2014

Stephen Huppert

Partner, Deloitte

Page 2: Australia's Superannuation System

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

Page 3: Australia's Superannuation System

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

Page 4: Australia's Superannuation System

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

Page 5: Australia's Superannuation System

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

Page 6: Australia's Superannuation System

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

Page 7: Australia's Superannuation System

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

Page 8: Australia's Superannuation System

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

Page 9: Australia's Superannuation System

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

Page 10: Australia's Superannuation System

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

Page 11: Australia's Superannuation System

11 © 2014 Deloitte Touche Tohmatsu © 2013 Deloitte Touche Tohmatsu

11 © 2014 Deloitte Touche Tohmatsu

Page 12: Australia's Superannuation System

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 ?

Page 13: Australia's Superannuation System

13 © 2014 Deloitte Touche Tohmatsu 13 Compliance Considerations © 2013 Deloitte Touche Tohmatsu

13 © 2014 Deloitte Touche Tohmatsu

Ownership of the assets

2013 2023 2033

Page 14: Australia's Superannuation System

14 © 2014 Deloitte Touche Tohmatsu 14 Compliance Considerations © 2013 Deloitte Touche Tohmatsu

14 © 2014 Deloitte Touche Tohmatsu

Trade offs in providing for old age

Page 15: Australia's Superannuation System

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)

Page 16: Australia's Superannuation System

16 © 2014 Deloitte Touche Tohmatsu © 2013 Deloitte Touche Tohmatsu

16 © 2014 Deloitte Touche Tohmatsu

Page 17: Australia's Superannuation System

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

Page 18: Australia's Superannuation System

18 © 2014 Deloitte Touche Tohmatsu © 2013 Deloitte Touche Tohmatsu

18 © 2014 Deloitte Touche Tohmatsu

Retirement

Adequacy

Delay

Retirement

Education

& Advice

Products &

Investments

Increase

Contributions

Page 19: Australia's Superannuation System

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

Page 20: Australia's Superannuation System

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

Page 21: Australia's Superannuation System

21 © 2014 Deloitte Touche Tohmatsu 21 © 2014 Deloitte Touche Tohmatsu

Contact

Stephen Huppert

Partner

Deloitte

[email protected]

@stephenhuppert

http://www.deloitte.com/au/superadequacy

Page 22: Australia's Superannuation System

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

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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.

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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.

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