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Focus needed on total member balances
The number of Australians still holding multiple superannuation accounts means it is probably better to focus on "member balances" rather than "member account balances", according to actuarial research house, Rice Warner.
In a recently published analysis, Rice Warner has suggested that if all super fund members (ignoring pensioners) consolidated their multiple accounts, the average account balance of $50,300 as at June 2015 would rise to approximately $90,000 — an increase of 79 per cent.
The analysis said that out of a total population of 23.8 million, 17.7 million Australians hold at least one account within the Australian super system and that, of these, 11.7 million are currently employed in some capacity, while 2.2 million are retired.
"The 17.7 million fund members hold 29.9 million accounts, largely reflecting a widespread tendency to join new default funds upon changing employment yet holding on to existing fund memberships. Some people will also hold multiple accounts for legitimate reasons, for example to maintain insurance cover that they held in a previous fund," it said.
The analysis said that it was difficult to assess the adequacy (or rather the inadequacy) of Australia's retirement savings by concentrating solely on average member account balances, but notes that even focusing on member super savings across multiple accounts, average super savings at common retirement ages would still not provide a so-called "comfortable" standard of living in retirement.
It said in the 60 to 64 age group the average member balance was $212,000 in June 2015 against an average account balance of $165,000, but the Association of Superannuation Funds of Australia Retirement Standard report calculated that a single 65-year-old, home-owning retiree would need savings of $545,000 to provide a "comfortable" standard of living — taking into account the Age Pension.
The analysis said super funds with a more accurate assessment of their members' total super savings in their multiple accounts were better placed to understand and educate their members as well as to design more appropriate products.
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