Retiring comfortably is on the minds of nearly everyone planning for the future. But how much money you need each year to do so, or what money you’ll have access to, can depend heavily on the country you’re in.

With that in mind, it looks like the age pension is going to become a less significant portion of Australia's Gross Domestic Product (GDP) in the coming decades, according to a new report.

The report, titled the 2023 Intergenerational Report, has stated that spending on the aged pension will drop from 2.3 to two per cent of GDP by the time the country reaches the 2060s.

Aged pension spending will drop in 2060. Credit: Pixabay/Pexels

This is despite projections that the number of people aged over 65 will double to nine million, and those aged over 85 will triple.

But why is that the case when the number of pensioners is increasing?

Well, the reason is that the rising superannuation savings pool is set to increase to 220 per cent of GDP by 2060, with the number of age pensioners expected to fall by 15 per cent.

There is approximately $3.5 trillion in the super assets pooled held by around 17 million Australians As the super pool continues to rise, fewer Australian seniors will be eligible for age pension payments.

By this projection, the country is set to have the lowest proportion of public spending on pensions among the Organisation for Economic Cooperation and Development (OECD) nations by 2035.

Treasurer Jim Chalmers described the superannuation system as 'intergenerational genius': ‘Super is delivering on its promise–providing a better retirement for more Australians and a better outcome for the budget over the next 40 years,' he said.

As Assistant Treasurer Stephen Jones said, 'More people are going to expect more. Superannuation is ensuring that those increased expectations and the increased notions about what it is to live a dignified retirement is going to be met.'

You can watch an ABC News In-depth report about this topic here:

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In related news, the Aged Community Care Providers (ACCPA) has proposed changes to the superannuation savings, which they said should be set aside to help improve standards in aged care and address the sector’s funding shortages.

Members have expressed their opinion about this proposal, with Member @JG48 saying: ‘So like the retirement fund we all used to be compelled to pay into before the creation of Superannuation. The one that the Labor Government took saying the next generation can cover the costs of the people's money they stole? Young people now have to pay for the pre Superannuation retirement, but only because the retirement savings have already been taken by Labor. It's not paying for, it's paying back....’

Member @Roscobro commented: ‘Leave our superannuation alone.’

‘The problem is, no one is asking where is the money going that people currently are paying. ? Because it’s not going on their care. Where is it going? No accountability.’ Member @Januvia1952 pointed out.

Key Takeaways

• Spending on the aged pension in Australia is expected to decline, despite a doubled ageing population, due to increased superannuation savings.
  
• By the 2060s, the number of people aged 65 and over is expected to double to nine million, while those aged over 85 will triple.
  
• The number of people on the aged pension is projected to decrease by 15 per cent as super balances rise to almost 220 per cent of GDP, leading to Australia having the lowest proportion of public spending on pensions among OECD nations by 2035.
  
• The Treasurer, Jim Chalmers, applauds the superannuation system for providing a better retirement for more Australians and a better budget outcome over the next 40 years.
  

What do you think of the 2023 Intergenerational Report, members? Share your thoughts in the comments below!

 

[Trudi]

" ... ‘So like the retirement fund we all used to be compelled to pay into before the creation of Superannuation. The one that the Labor Government took saying the next generation can cover the costs of the people's money they stole? Young people now have to pay for the pre Superannuation retirement, but only because the retirement savings have already been taken by Labor. It's not paying for, it's paying back....’ ..."
Where DO you get your information from? Have you been listening to that Sky News lot again? These are the facts -

1946 Labor Prime Minister Ben Chifley watched what Canada, New Zealand and the United Kingdom were doing about their WWII veterans returning home, mentally scarred and possibly to jobs that were now being done by women. The USA was "letting the market take care if itself". They had done the same through the Great Depression and Australia had followed suite. The result of that was that the USA had a crime wave like nothing comparable in history and Australia had young men called "swaggies" walking homeless around getting small jobs for minimal pay until WWII started to suck them up as cannon fodder.

1947 - Chifley's Labor Government reached agreement with the then Opposition Leader Bob Menzies and the Social Services Consolidation Act 1947 was passed. Menzies also saw the impending tragedy as battle hardened men came back to Australia to the possibility of unemployment. As it fortunately turned out, Australia undertook huge post war programs such as the Snowy Mountains Project and there was plenty of work for all able bodied people and the European immigrants that also arrived.

The Social Services Consolidation Act 1947 took 7.5% of PAYE tax and company profits tax and fed it into a trust fund. Unfortunately, that trust fund was not put to a general referendum so that it could be protected by the Constitution. If it had been, no one would be talking about "baby boomers", "paying for aging Australians" or worrying about "the young paying for the old". The Fund would by now be self-sustaining. By 1950 The Fund was worth 100,000,000 Australian pounds, a huge amount of money for that time and a huge temptation for politicians.

In 1972 Gough Whitlam led Labor to government with the "It's Time!" campaign. To cut a long story short, "The Dismissal" happened and Malcolm Fraser became the Liberal Party Prime Minister. Fraser raided the Trust Fund. John Howard became the Coalition government Prime Minister in 1995 (1995 - 2007). John Howard changed the legislation so that the 7.5% of PAYE and profits tax went to General Revenue rather than the Trust Fund. Labor's Kevin Rudd became Prime Minister in 2007 (2007 - 2010). During this time Rudd (Labor had given up all pretence of being a progressive party) legislated the Trust Fund out of existence. This was a politician bum covering exercise that Fraser and Howard had forgotten to do. With the Trust Fund in existence, a future Prime Minister could get a fit of "We have to look after our people" and put together a Trust Fund Board and ask them to find the stolen funds. Crazier things have happened!

So, a Labor Prime Minister and a Conservative Opposition Leader saw the need and created a fund to take care of the returned service people, medically disabled and unemployed. Two Liberal Prime Ministers and a "Right" faction Labor Prime Minister raided, dismantled the funding and then wrote it out of existence.

Young 'uns ... only 7.5% of the tax revenue was needed. That was because it was locked in for purpose, not used to buy nuclear submarines so that we can become the 51st state of the USA.

That retirement fund you are speaking of never existed!

"For decades an urban myth has circulated that accuses politicians of misappropriating funds meant to be set aside for today’s pensioners. The myth weaves historical fact and misconception into a story designed to reinforce claims the Age Pension is an earned entitlement rather than a ‘welfare’ payment."

You can read all about here:

Myths of entitlement: a history of the Age Pension and the National Welfare Fund

20 December 2021 PDF version [764 KB] Don Arthur Social Policy Contents Introduction The stolen pensions myth Entitlement to the Age Pension Safety net or earned entitlement? The debate over contribution Proposals to replace the Age Pension Coalition proposals Figure 1: &lsq

www.aph.gov.au

 

[Trudi]

Hi Imbi - I so agree with you - I am 83, went through the Labor 17% - had our own business ( for retirement ) the interest rate killed our hopes - then this " smiling " idiot comes along and starts to make my final years miserable, just when we saw a small light at the end of the tunnel. We didn't have super in days gone bye but when the 17% hit all our savings vanished, because we lost our home - everything., so Chalmers, piss off and leave seniors alone.

What has Chalmeers done to you?????

You say you are 83, so it is EXTREMELY unlikely that you will still be around 40 years from now!!

 

[Ezzy]

I have no Super nor could l afford to put money away as the breadwinner with 4 children & a mortgage. Forced retirement came at age 47 in 1995 through illness, therefore unfortunately, l am relient on a Pension until the day l die. My wife also receives a Pension but also receives a Carer's Allowance for me.

From the time l finished my Apprenticeship until approx 3 years after marriage there was not a period of a full years employment, in fact over this period l had only worked a total of 12 months.