CourierMail - 23rd January 2011: A LOOMING surge in baby boomer retirees may force superannuation funds to freeze assets and ban withdrawals unless minimum contributions rise from 9 to 15 per cent of wages and salaries. Link
There has been some press coverage that suggests that our Superannuation pool of savings will be run down due to the increasing number of Baby Boomers retiring who need to spend their savings to live.
I tried to examine the logic of this concept, other than an Industry wishing to pressure a Government to increase the size of the Industry.
By sourcing data from the Australian Bureau of Statistics, I have been able to draw some analysis to get a clearing view of changes in population groups. The chart below gives you an idea of the fear of a proportional increase in retirees:
Over the next decade, in % growth terms, there is a disproportionate number of people entering retirement age. Statistics will do that.
The growth in people aged 65 + is the green line. In 2011, the increase in number of people 65 + is 93,000. But the increase in people aged 20 to 65 is 223,000. You would think that the additional savers would more than offset the people drawing down funds in retirement. There doesn't seem to be a cash-flow issue today, as the media might suggest. I am not saying that 15% superannuation is a bad idea, but threatening fund redemptions unless an increase is made seems disingenuous.
Longer term trends do indicate that the proportion of people aged 20 to 65 declines over time. The absolute number continually increases, but as a proportion of the total population the long-term trend is down.
The problem is more what the political attitude is to long term social welfare and how the country generates and allocates resources.