Australia's compulsory superannuation system is often praised globally, but conservative politicians Andrew Bragg and Pauline Hanson have called it a failure. However, experts argue that spending on the aged pension will remain stable for decades, contradicting these claims.
Claims of failure
Bragg, the Coalition's putative shadow housing minister, told ABC radio that compulsory super "is one of the biggest public policy failures since federation, in the sense that it hasn’t helped the budget, and it has not really helped many people get off the pension." Hanson echoed this on News24, saying, "A lot of people [are] pulling out their superannuation, spending it, then end up on the age pension anyway. I think the whole system is broken."
Treasury projections
Bragg cited Treasury's 2023 intergenerational report (IGR) showing age pension spending has been stable at just over 2% of GDP over the past 26 years and will remain at 2% by 2063. He noted that superannuation tax concessions are projected to overtake age pension spending in the 2040s. However, the IGR also states that the total cost of Australia's retirement income system will remain steady at around 4 to 4.5% of GDP over the next 40 years, despite population ageing.
Expert rebuttal
The IGR predicts the share of people fully funding their own retirement will rise from 29% to 38% by 2050. David Knox, a former senior partner at Mercer, says by 2030 Australia will have the lowest aged pension cost of any OECD nation. "With our ageing population, you would expect that [aged pension spending] cost to rise, but it’s not rising and if anything it’s falling," he said.
International comparison
The OECD's latest "pensions at a glance" report shows average public pension spending among member countries is expected to climb from 8.8% in 2023-24 to 10% by 2050. Even including tax concessions, Australia's retirement income system will cost about two-and-a-half times less than the OECD average by mid-century.
