Alert on superannuation black hole

An analysis of compulsory superannuation contributions shows that payouts will fall dramatically short of people's expectations, with the average Australian male worker left with less than $14,000 a year of personal retirement income after 40 years of contributions.

The Association of Superannuation Funds of Australia has calculated that on an average weekly income, a worker would be entitled to a lump sum of $267,508 at age 65, which works out to be $13,375 a year for the rest of his life. Women – who spend only 21 years in full-time work on average but live five years longer – will be even worse off, the study has found. Most men and women will be reliant on top-up age pension payments of up to $11,000.

Baby-boomers generation retiring around 2011 will have had just 20 years of compulsory super contributions and will be entitled to $75,000 or less in lump sum, or $3,800 a year for their post-retirement lives. Again, this would require topping up from the age pension.

Superannuation and actuarial experts argue that the current compulsory superannuation should be increased by at least an extra 3 per cent. They also believe that if the 15 per cent tax on contributions were removed it would equate to an additional 3 per cent. Experts agree that Australia's superannuation is the most taxed in the world and needs an overhaul to attract more voluntary contributions.