Celebrating 30 years of compulsory super

1 July 2022

Australia’s superannuation system is one of the best in the world, and the fifth largest1. This year is its 30th anniversary. AustralianSuper members can feel proud knowing they’re with a Fund that’s helped build the super system and is focused on making it better so all Australians can live well in retirement. 

Compulsory super was first introduced for working Australians in 1992 at a rate of 3%. One of the keys to success for Australia’s super system is the mandatory payment of super to eligible employees. This payment is the super guarantee (SG). Now in its 30th year the SG rate is 10.5% and is legislated to rise to 12% by 2025.  

Super has helped boost the retirement savings for many Australians. It’s also reduced the number of people who rely solely on the government aged pension. For an AustralianSuper member, a 30 year old who started receiving super in 1992, 30 years ago, would have a balance of around $300,000 now. A great boost to their financial position when they retire.2

 

Supporting the super system to benefit members  

We believe in pushing for improvements to the system for the benefit of members and all Australians.

We’ve long advocated for the removal of the $450 super guarantee threshold, which was finally removed from 1 July 2022. This change helps to make the system deliver for eligible low-income, casual and part-time workers. It will benefit hundreds of thousands of workers, in particular women. We also support the rise of the super guarantee to 12% by 2025. 

These are important developments. Both help people build stronger retirement savings during their working lives. 

 

Leaders in superannuation

AustralianSuper has a gender diverse board, guided by Dr Don Russell as chair of the Fund. Dr Russell was an adviser to Prime Minister Paul Keating, who introduced compulsory super into law in 1992. Dr Russell says the system was designed to increase living standards when people finished working. 

‘The greatest concern for most Australians as they approached retirement 30 years ago was that apart from the age pension and a small amount of savings, most people were facing at best a frugal future, or worse, poverty in retirement,’ Dr Russell says. 

‘While it’s still yet to fully mature, superannuation has already played a major role in helping to put millions of Australians in a better financial position in retirement.’ 

 

The future of superannuation

Around 16 million Australians have super, and the assets that their super is invested in totals about $3.4 trillion3. Super funds – acting on behalf of members - are now some of the largest investors in many areas of the Australian economy.

The system has worked well for 30 years. Long-term investment provides members with compounding returns and builds economic capacity. But Dr Russell says there is more work to do on the following issues: 

  • Securing super for all types of workers. Many workers miss out, including the self-employed and gig workers.
  • Deliver a superannuation system that delivers better retirement outcomes for women.  
  • Ensure access to affordable, good quality financial advice and appropriate insurance.  

To achieve these goals the purpose of super needs to be established in legislation. 

‘This will ensure that super is primarily used to provide income in retirement and not as a short–term solution for some of the nation’s other economic issues,’ Dr Russell says.  

 

Investing on behalf of members

AustralianSuper is Australia's top-ranked super fund in terms of reputation4. We use our size and scale to invest for members over the long-term. We also help shape the direction of superannuation policy. As Australia’s largest super fund, we take advantage of investment opportunities that aren’t available to smaller funds. These include investing in large unlisted assets like Kings Cross, Ausgrid and WestConnex. 

Read more: Investing to grow your super and the Australian economy

 

The last 3 decades have been positive for members, with investment teams and markets providing strong returns. AustralianSuper’s Chief Investment Officer Mark Delaney says this has helped the super system grow. 

‘Over the last 30 years AustralianSuper’s investment returns have helped people grow their savings dramatically.’ 

For Mr Delaney, the single biggest change in this time is the sheer size of the industry. 

‘If you go back 30 years, it was tiny and pretty much irrelevant to capital markets, how society operated, to social change; it's just huge now and it wasn't like that when I started out,’ he says. 

‘Thirty years ago, [industry] funds were under $1 billion each, just coming out and investing in capital guaranteed products... It's enormous now and it will only get bigger.’ 

As well as this, Delaney notes that super funds are now dealing with more challenging investing environments caused by inflation and geo-political volatility around the world. 

Read more: Retail or Industry super funds – what's the difference?

 

View AustralianSuper’s performance

 

 

References:

1. Super Talk, ‘30 years on, Australis’s super system attracts the envy of the world’. 27 June 2022. Dollar figure quoted correct on 31 March 2022.  
2. This is an example only. The following assumptions apply: A 30 year old in 1992 with no super (30 June 1992). On average earnings over the ensuing 30 years. SG rates starting at 3% (1992) and rising as they occurred up to 10% for FY22. AustralianSuper fees and default insurance premiums are deducted. AustralianSuper returns to 23 June 2022.
3. As at 31 March 2022, AustralianSuper is the nation’s biggest superannuation fund, which manages more than $261 billion of members’ retirement savings on behalf of more than 2.7 million members  
4. RepTrak March 2022 Reputation Tracking survey. 

Investment returns aren’t guaranteed. Past performance isn’t a reliable indicator of future returns.

This may include general financial advice which doesn’t take into account your personal objectives, financial situation or needs. Before making a decision consider if the information is right for you and read the relevant Product Disclosure Statement, available at australiansuper.com/pds or by calling 1300 300 273. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at australiansuper.com/TMD.

AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.


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