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Voluntary contributions drop counters compulsory increase
Low levels of voluntary contributions are threatening to wipe out the Government's intended increase from 9 per cent to 12 per cent in the compulsory contribution rate, according the AMP Retirement Adequacy Index from June to December 2012.
The decline has put pressure on Australians' retirement adequacy, which has dropped to just under $49,000 per year - its lowest level since the Global Financial Crisis (GFC), it said.
Adequacy levels fell 2 percentage points to 69.5 per cent, while retirement savings fell 7 per cent to $492,000, with AMP saying the drop in voluntary contributions was the main cause.
At 12.3 per cent of salary, the average worker's contribution rate was below the 12.6 per cent of salary members were contributing as of December 2006.
Deloitte Access Economics partner Chris Richardson said the research showed the strain that would be put on future governments and taxpayers in relation to the ageing population.
Older workers were less willing to contribute more, while younger members were generally upping their contributions voluntarily, AMP said.
Females were also contributing more than males and closing the gender gap in retirement savings, according to the Index.
AMP Financial Services managing director Craig Meller said the combination of the drop in voluntary contributions, market volatility and continuing subdued investor sentiment were taking their toll on Australia's retirement savings.
"The Index shows salary sacrifice contributions have fallen across most age groups, particularly for older Australians who traditionally put more into their superannuation as they approach retirement, but are now restricted by caps on voluntary super contributions or worried about global markets."
"Consumer caution is also continuing to impact investment behaviour post-GFC, according to the Index, so it's important our industry continues to focus on educating customers about the benefits of super as a long-term savings strategy - offering individuals a wide range of investment options, including cash, and tax-effective long-term returns," Mr Meller said.
The Index was based on 280,000 AMP corporate superannuation customers.
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