Why is super important?

Australia's population is ageing. The baby boomers are starting to retire, more people are accessing the Age Pension and most are living longer than previous generations. This will increasingly put pressure on the resources the Government can draw on to provide an income for a growing number of people who have retired.

Currently there are five working people paying taxes to support one retired person on the Age Pension. In 20 years, however, it is estimated there will only be three working people supporting every one retired person1. This means the Government will collect less revenue through income taxes to fund the retirement of more people.

Also, life expectancy over the past 100 years has changed substantially.

How does this affect me?

Under these circumstances it may become difficult for the Government to continue to provide the same level of financial support to retired Australians. Even if you do receive the Age Pension it may not be enough to live on and you may need your superannuation savings to make up the difference.

In a nutshell, this means most of us will need to fund at least part of our own retirement. That means saving while we are working. To encourage us to save via super, the Government provides incentives in the form of tax concessions. Depending on your circumstances, this means your money has the potential to grow faster in super than in a regular, fully taxable investment.

1 Financing the Ageing: Now is the time to act. A Discussion Paper by the Financing the Ageing Committee of the Institute of Actuaries of Australia. March 1999. Table 2.