AIST-Mercer Super Tracker

AIST-Mercer Super Tracker

AIST-Mercer Super Tracker launched at Conference of Major Superannuation Funds

  • 19 March 2015
  • Gold Coast, Queensland

Gender gap, tax equity & lack of older workers, prove to
be weak spots in super system

New modelling tracking the performance of our super system proves it is in a strong position to provide adequate income to retired full-time workers, however it has also shone a light on the retirement savings gender gap in Australia, the low workforce participation of older workers and the role of super tax concessions in the sustainability of our system.

The AIST-Mercer Super Tracker – launched today at AIST’s Conference of Major Superannuation Funds on the Gold Coast – has been jointly developed by AIST and Mercer to provide an objective means of assessing super and road test new ideas and policies.  The initial score for the Tracker is 64.9 out of a possible 100.

The new Super Tracker confirms the system is strong in many areas, but more work is needed to ensure super is fair to all, particularly in terms of closing the gender gap in retirement savings.

It shows, on average, super benefits received by females are less than two thirds of those received by males.  This gap is offset to some extent by the age pension, but a difference of around $45,000 for the average super balance for men and women is too large to ignore.

The AIST-Mercer Super Tracker also tests the equity of government support.  It shows the spread of government support across income levels is more even than perceived by many.  However, it does recognise the cost of tax concessions escalates at the top income levels where there is no pension offset and the overall score for this leaves a lot to be desired.

The score for workforce participation of older Australians is also relatively low.  Participation of Australians aged 65 and older needs to almost double, from 12.4% to 20%, to improve the sustainability of our system, in fact participation rates for workers aged 60-64 also need to significantly increase from 53.7% to 65% to strengthen our system.

According to the Tracker, it appears certain that the cost to the Australian Government of age-related pension payments will be much lower than almost every other OECD economy and the cost of super tax concessions are much lower than the age-related pension costs, which results in a much stronger score.

AIST CEO Tom Garcia said
the Super System Tracker - a first for the superannuation industry – would help track the super system’s progress and lead to more informed debate about future policy changes.

We hope the Tracker will help put a stop to ad hoc policy changes and endless tinkering with super,” Mr Garcia said. “It has been built to test policy proposals against a range of factors affecting the adequacy and sustainability of our retirement income system and bring some much-needed objectivity into the super debate.”

Mercer Senior Partner, Dr David Knox, said, “This new tracker brings evidence based views to the table on hotly debated issues such as the equity of government support and the gender gap in retirement savings.  It provides a measure of where we are at and a tool to model how we can improve.”

Potentially, more than ever before, Australia’s superannuation system is being debated and it’s critical that any future changes are based on evidence,” Dr Knox said.

The Tracker uses a weighted average of ten indicators for success (see more details below). Importantly, it reveals that with super set to rise to 12%, our retirement income system is on track to deliver an adequate income (defined as 70% of the median income for full time workers) for most Australians who enter the workforce at the age of 20 and retire at 67 years. For many Australians retiring in the future, this income will still include a combination of superannuation and Age Pension benefits.

“While it’s good to see that our super system, working in tandem with the Age Pension, is on track to deliver an adequate retirement income for most Australians, it’s also clear that some policy changes will be needed in order for the super system to be fair to all,” Mr Garcia said.

Dr Knox said, “This model will allow us to analyse and assess potential changes and track Australia’s super system regularly – are we getting better or worse and why?  The real value will be in modelling the implications of policy changes in the future, such as changes to the Superannuation Guarantee rate, tax concessions, coverage of super, labour force participation rates, and even changes to the age pension.”

Key findings

The AIST Mercer Super Tracker has given the super system a score of 64.9 out of a possible 100. This score is derived from an aggregate weighting of the following ten indicators:

AIST Mercer Super Tracker Key Findings


About The Australian Institute of Superannuation Trustees
is the peak body industry body for the $600 billion not-for-profit super sector which includes industry, corporate and public sector funds.

About Mercer
Mercer is a global leader in talent, health, retirement and investments. Mercer helps clients around the world advance the health, wealth and performance of their most vital asset – their people. Mercer’s 20,000 employees are based in 43 countries and the firm operates in over 140 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 55,000 employees worldwide and annual revenue exceeding $12 billion, Marsh & McLennan Companies is also the parent company of Marsh, a global leader in insurance broking and risk management; Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a global leader in management consulting. Follow Mercer on Twitter @MercerAU @MercerInsights

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