Last week, SMC released a first-of-its-kind analysis of the super system that showed something both striking and unremarkable: the biggest beneficiaries of more than three decades of super have been middle to low income workers — which is exactly what was intended.
The report, Retirement Revolution: Super’s Coming of Age, uses HILDA and ABS data to track the income and wealth of recent retirees over three decades. It finds that the Super Guarantee has fundamentally reshaped retirement outcomes in Australia, delivering higher incomes, greater wealth, and reducing reliance on the Age Pension—particularly for everyday workers.
In a system as vast, complex and long-term as super and closing in on 20 million participants, it’s easy for misconceptions to take hold. Which is why this report is so important – it cuts through the noise and shows us what’s really happening.
The report’s central finding is that super has tilted the balance in favour of middle and low-income earners. For example, over the past 20 years the proportion of middle-income retirees with super has nearly doubled, their average super balances have more than tripled, while their super incomes have doubled — five times the rate of increase for the wealthiest. Similar increases can be found for lower-income groups.
This uplift in retirement income is not only improving living standards but also delivering significant savings to the federal budget. New modelling also conducted for the report shows that without the super system, Age Pension expenditure would be $12 billion higher annually by 2028, with over 512,000 more Australians relying on the pension. To provide a similar income through the Age Pension alone would cost taxpayers an additional $86 billion per year.
The report also found that super is lasting longer into retirement. The proportion of retirees in their 70s with super income has tripled over the past two decades and doubled for those in their 80s. This reflects the system’s maturity and its ability to support longer retirements.
And super has played a powerful role in redistributing wealth. In 1990, financial assets were concentrated in the top 10% of households. Today, thanks to super, financial assets form at least 20% of wealth across all income groups. The largest percentage increases in wealth have occurred in the second, third, and fourth quintiles—driven by super.
A key conclusion to be drawn from the report is the compulsory, universal and preserved nature of super has underpinned these changes. Which is why it’s so important to protect those design principles given the system still has decades to reach full maturity.
But while the results vindicate system design, there’s more work to do. Retirees who rent, live alone, or retire involuntarily due to health or caregiving responsibilities face significantly lower incomes and wealth. Many have limited or no super due to lower lifetime earnings, insecure work, or unpaid super. Women continue to retire with lower balances and are more likely to experience poverty in retirement.
This is only the first in a series of three reports from SMC, with future publications to explore how to make the system fairer, simpler, and more sustainable.
This editorial was originally published in our weekly Super Wrap email. Subscribe here.
