Spending on the age pension will decline despite an ageing population, with superannuation savings set to double over the next four decades.

The age pension’s cost will drop from 2.3 to two per cent of GDP by the 2060s despite the number of people aged over 65 doubling to nine million and those aged over 85 tripling, the 2023 Intergenerational Report will reveal on Thursday.

People aged over 100 will increase sixfold.

But the number of people on the age pension is expected to fall by 15 percentage points as super balances increase to almost 220 per cent of GDP – up from 116 per cent currently – by the early ’60s.

Around 17 million Australians own a collective $3.5 trillion in super assets, with people retiring in the mid-2040s set to have received the super guarantee at the rate of at least nine per cent for their whole working lives.

So as the superannuation pool grows, Australia is set to have the lowest proportion of public spending on pensions among OECD nations by 2035.

Treasurer Jim Chalmers called the superannuation system “intergenerational genius”.

“Super is delivering on its promise – providing a better retirement for more Australians and a better outcome for the budget over the next 40 years,” he said.

Assistant Treasurer Stephen Jones said Australians’ expectations of what is needed for a dignified retirement are going to shift.

“More people are going to expect more,” Mr Jones said.

“Superannuation is ensuring that those increased expectations and the increased notions about what it is to live a dignified retirement is going to be met because people are saving for it throughout their entire life.

“And it’s working.”

Dominic Giannini
(Australian Associated Press)