Fact check: Will 50pc of Australians die before they can access their superannuation?

Updated

Last week Clive Palmer joined Coalition senators in a successful deal to scrap the mining tax, which resulted in a freeze in compulsory employer contributions to superannuation.

Under legislation introduced by the former Labor government, employer contributions were to rise gradually from 9.5 to 12 per cent by 2019. Now the rate will stay at 9.5 per cent until 2021 and will not reach 12 per cent until 2025.

In defending his support for the freeze, the Palmer United Party leader said it was better to put the money in workers' pockets now, because the majority of Australians won't live to see their super paid out.

"We're saying that workers in Australia – the Government's seeking to extend the age of the pension to 70, there's moves to take the entitlement for super up beyond 67 or 70," Mr Palmer said.

"Australian families are doing it tough, and we think it's more important ourselves that Australian families have access to those funds, or their purchasing or bargaining power now, while they're bringing up their children, not in 50 years' time.

"And we know as a statistical fact that over 50 per cent of Australians will be dead by the time they get access to their super."

Is that a statistical fact? ABC Fact Check investigates.

The claim: Clive Palmer says it is a "statistical fact" that over 50 per cent of Australians will be dead by the time they get access to their super.

Clive Palmer says it is a "statistical fact" that over 50 per cent of Australians will be dead by the time they get access to their super. The verdict: More than 89 per cent of people are expected live beyond the age of 65 years, when everyone can access their super. Mr Palmer is wrong.

When Australians can access their super

The Australian Tax Office publishes a table of the 'preservation age' for superannuation, which shows the general age a person can access their super benefits.

When you can access your super Date of birth Preservation age Before 1 July 1960 55 1 July 1960 – 30 June 1961 56 1 July 1961 – 30 June 1962 57 1 July 1962 – 30 June 1963 58 1 July 1963 – 30 June 1964 59 After 30 June 1964 60 Source: Australian Tax Office

There are some situations where a person may be able to access their super earlier - for instance if they have a terminal illness, permanent disability or can prove serious financial hardship.

Retirement age and the age a person accesses their super do not always correlate. According to the Australian Bureau of Statistics, based on the last five years of data, the average age people retired was 61.5.

If a person is still working when they reach their 'preservation age' it's possible to start drawing on super through an income stream before retirement.

If a person continues working into their sixties, by the age of 65 they are able to fully draw down on their superannuation even if they continue to work.

This means in all circumstances by the age of 65 a person would be able to access their super, and many people can access it by the age of 55.

In all situations a person would be able to access their super before they qualify for the government-funded age pension.

Life expectancy

Actuaries look at how long Australians are living and are projected to live, in order to make financial estimates chiefly for the insurance and superannuation industries.

On September 3, the Actuaries Institute said 89 per cent of Australians would live to 65. An even higher percentage of people will be alive when they reach their earlier "preservation" age.

The institute's president, Daniel Smith, said the estimate was based on the most recent Australian Life Tables, published by the Australian Government Actuary.

"The percentage will be even higher if long-established trends to increasing longevity continue," Mr Smith said. "The average life expectancy of a person born today is 94 for an Australian female and 93 for an Australian male - which means that 50 per cent of people are expected to live beyond these ages," he said.

Echoing the same finding, a spokesman for one of Australia's largest industry funds, Australian Super, told Fact Check its actuarial team used the Life Tables to conclude that 89 per cent of 25-year-olds would make it to 67 years of age.

"This is slightly lower for men at 87 per cent and higher for women at 92 per cent," he said.

ABS figures show more than half of girls born since the turn of the century are expected to still be alive at the age of 85 years.

What the super funds say

A spokeswoman from HESTA, the largest super fund for health and community services, told Fact Check that "of all benefits paid by HESTA in the 2013-14 financial year, only 3.35 per cent were following the death of a member".

This refers to the number of policies or accounts paid to members.

A spokeswoman for one of the largest super funds, who asked to remain anonymous, backed up that number, telling Fact Check that it paid less than 5 per cent of super directly to beneficiaries after a member had died.

Fact Check asked Mr Palmer for the basis for his claim that over 50 per cent of Australians will be dead by the time they get access to their super. No reply was received.

The verdict

More than 89 per cent of people are expected live beyond the age of 65, and the age at which a person can access their super is significantly lower.

Some of Australia's largest super funds confirmed that less than 5 per cent of funds are paid directly to beneficiaries because the member has died.

Mr Palmer is wrong.

Sources

Topics: clive-palmer, business-economics-and-finance, superannuation, federal-parliament, federal-government, minor-parties, australia

First posted