The Coalition and One Nation are again targeting Australia’s superannuation system, despite evidence it has reduced pension reliance and warnings that early withdrawals could fuel inflation and weaken retirement savings.

Both of Australia’s major opposition parties have recently taken aim at Australia’s superannuation system.

Shadow Housing Minister Senator Andrew Bragg, a longstanding advocate of allowing superannuation to be used to purchase housing, last month described the system as “one of the biggest public policy failures since Federation”, claiming it had failed to help the budget or keep people off the pension.

And One Nation’s leader Senator Pauline Hanson, who also wants people to have more capacity to withdraw funds from their superannuation accounts before retirement, last month told News 24 that the superannuation system was “broken”. Both of them argued, in support of their contentions, that the superannuation system has failed to keep older Australians “off the pension”.

These assertions are simply factually incorrect.

Over the last two decades, the proportion of Australians aged 65 and over has risen by 4.6 percentage points, from 12.9 per cent to 17.5 per cent, as shown in Chart 1. But the proportion of Australians who are on the age pension has risen by only 0.2 percentage points, from 9.5 per cent to 9.7 per cent, as also shown in Chart 1.

That’s because, as shown in Chart 2, the proportion of the population aged 65 and over who are receiving the age pension has declined from 73.3 per cent in 2005 to 55.1 per cent as at June last year.

Part of the decline in the proportion of people aged 65 and over who are on the age pension is the result of the gradual increase in the age at which people can access the pension from 65 to 67, between July 2017 and July 2023, which was originally foreshadowed in the 2009-10 federal budget (brought down by then Treasurer Wayne Swan).

But the major contributor to the decline in reliance on the age pension has been the increase in the number of retirees who are able to draw on their accumulated superannuation savings. As of December 2023, according to Treasury, there were 1.6 million Australians receiving income from a superannuation product, and a further 2.5 million Australians were expected to join them over the following ten years.

That puts Australia in a very........

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