Super balances still recovering after horror pandemic period: ASFA

New research from the Association of Superannuation Funds of Australia (ASFA) has found Australian superannuation balances have bounced back after a horror 2021-22 financial year, impacted by COVID Early Release payments and negative average investment returns.

According to Australian Taxation Office (ATO) data, the average superannuation balance of males aged 15 and over as of 30 June 2022 was $182,667 with a median balance of $66,159. For females, the average balance was $146,146 and the median balance was $52,075.

ASFA said these figures were down compared to those recorded at the end of June 2021, as a result of negative average investment returns in pre-retirement stage was -3.3 per cent in 2021-22 and COVID Early Release payments that forced the closure of over 160,000 superannuation accounts and left approximately 1,000,000 accounts with less than $1,000 remaining.

However, average investment returns have since recovered to 9.2 per cent in 2022-23 and 9.1 per cent in 2023-24, with around 30 per cent of Australians now able to afford the expected expenditure amounts in retirement at or above the ASFA Comfortable Retirement Standard. The association also estimates that this number will increase to 50 per cent or more by 2050 as average and median balances grow.

“The increase to 11.5% in July and the upcoming rise to 12% next year, paired with strong investment returns, are game-changers for super fund members. More Australians than ever are set to enjoy a dignified, comfortable retirement, and the future of retirement savings has never looked brighter,” ASFA CEO, Mary Delahunty, said.

ASFA also continued its support of the recently introduced legislation to pay superannuation on Commonwealth Paid Parental Leave (PPL), with its report revealing that every generational cohort (every five years of age) contained a gendered difference in superannuation balances. The 60-to-64-year-olds cohort recording the largest gender superannuation gap of $80,020 or 21 per cent.

However, the research also suggested some headway has been made towards bridging the gender gap as women increased their share of total superannuation assets held by 1.5 per cent from 41.9 per cent in 2018 to 43.4 per cent in 2022 – with further legislation only set to improve on the already-made progress.

“Women are more likely than men to have had time out of the workforce following the birth of a child. With the current settings, this time out of the workforce to raise the next generation becomes a financial penalty for women in retirement,” Delahunty said.

“The introduction of super payments on paid parental leave will assist to bridge the gender retirement gap but there is still work to be done. Adequate and equitable pay, the valuing of care work, and tax settings all need examining to ensure women aren’t left behind.”