The truth about Australia's $4 trillion retirement divide

At the Ecstra Foundation's National Financial Wellbeing Summit, the government celebrated super as a national triumph. But industry experts say the spoils are going to those already well-off.

Superannuation has had a busy year of reform.

Super is now paid on parental leave, the Super Guarantee is at 12% and the government passed a bill requiring employers to pay super at the same time as wages.

At the top end, earnings on balances above $3 million will also be taxed at 30% and those above $10 million at 40%.

At the bottom, the Low Income Super Tax Offset (LISTO) will rise from $500 to $810 in 2027, expanding to incomes up to $45,000.

It's a reform agenda the government believes will make the super system fairer and more sustainable.

The Association of Superannuation funds of Australia (ASFA) called it "not just a retirement savings success, but a national productivity engine".

Assistant Treasurer and Financial Services Minister Daniel Mulino said as much in a pre-recorded address to the Ecstra Foundation's Financial Wellbeing Summit.

"We want Australians to be confident their retirement savings are working for them," Mulino noted, before championing the $4 trillion held in the super sector.

On paper, the system looks stronger than ever.

The average super balance has risen to $172,834, up nearly $8000 from a year earlier.

But as the panel that followed argued, averages can hide who's really being left behind.

"It just replicates inequality"

"Do you think that the current superannuation system meets the needs of Aussies?" asked moderator Effie Zahos, former Money editor.

"The short answer is no," said Xavier O'Halloran, chief executive of Super Consumers Australia.

"It just replicates the inequality that exists in the system already."

O'Halloran cited new research from the Super Members Council showing how super has entrenched wealth divides over the past two decades.

"Back in the late 90s, early 2000s, higher-wealth people had superannuation and they've all got superannuation today. Their wealth has grown.

"In the middle, we've seen some positive change. That's the good thing about the Super Guarantee system.

"But in the lowest quartile there's virtually no growth. They didn't have super 20 years ago and they don't have super today."

Even among the second-lowest quartile, more than half fall well below the amount needed for a comfortable retirement.

And when averages are quoted, like ASFA's $172,834 figure, they mask the reality: the median balance is just $68,000 for men and $54,000 for women.

The average balance for men is also $38,000 higher than for women.

"When we talk about averages like the minister did, we miss that context," O'Halloran noted.

Wealth inequality widens

Cassandra Goldie, chief executive of the Australian Council of Social Service (ACOSS), argued the picture looks even worse when you include total wealth.

"Over the past two decades, the top 20% have seen their wealth grow by 84%, while the bottom 20% have only grown by 20%.

So the top group's wealth has increased at four times the rate of those with the least."

If you're in the bottom quintile, you might have $36,000 on average, "if you're lucky". In the top quintile, it's over $3 million. And that gap is widening.

"About 50% of our wealth holdings are in real estate, so let's talk about property taxes. The next biggest chunk (22%) is in super. So, let's talk about super reform."

Who super leaves behind

The gap isn't just about income; it starts with access.

"Income is a misleading way to approach this," said O'Halloran.

"Balances are demonstrably low for women, First Nations people and culturally and linguistically diverse communities."

He said the system fails to account for different life experiences and barriers to participation.

"We're not addressing design details that would support people facing family violence or irregular employment. There's been a real lack of attention."

That neglect has real-world consequences, said Leah Bennett, managing director of the First Nations Foundation.

"I helped reconnect an elderly man with $280,000 in super, and he was living in third-world conditions.

Even basic identification is a barrier, according to Bennett.

"Many First Nations people still don't have a birth certificate or Medicare card," she said.

"Without ID, it's hard to engage with financial services - and if you're not engaging, you're not learning how the system works."

Cultural competence is another barrier.

"Many organisations don't know how to interact respectfully with First Nations people," Bennett said.

"When there's mistrust between mob and institutions, people disengage."

That mistrust deepens when the system feels extractive, she said.

"We've contributed over $16 billion to the Australian economy.

"Yet we're forced into a mandatory super system without knowing how to participate meaningfully. We don't have the resources, tools, or education."

Since 2016, the First Nations Foundation has reunited more than $24 million in lost super with Indigenous Australians, many in remote communities.

"Mob come off country, work hard, then go home," Bennett said.

"But they don't know they have super because no one told them. They don't know they're entitled to insurance benefits like TPD. That's the cost of exclusion."

Super's unfair advantage

O'Halloran argues that Australia's $4 trillion super pool has evolved to reward those already ahead.

He cited a government review showing the top 20% receive more in super tax concessions than a person on the full age pension.

"It's perverse that we've let the system develop this way without fixing it."

Goldie agreed, describing super's tax treatment as "egregiously generous."

"It was meant to help people save for a decent retirement-not build a private wealth fund," she said.

"Now we've created a $4 trillion beast. It keeps growing, but it's not reducing inequality."

O'Halloran welcomed measures like the LISTO increase and higher taxes on multimillion-dollar balances, but said they barely scratch the surface.

"The most targeted thing we could do to cut retirement poverty is increase rent assistance.

"If you're renting in retirement, your financial stress rate jumps from 15% to 60%. That's the real inequality."

The longer-term fix, he said, is tackling the "out of control" housing divide.

Goldie said rent assistance is only part of the picture.

"The most urgent fix is lifting base welfare payments. Too many people fall through the cracks under strict eligibility rules.

"And social and affordable housing supply has collapsed over two decades. We're paying the price."

Education, inclusion and the next chapter

Closing the super gap will take more than policy tweaks; it needs cultural change inside the industry, Bennett said.

"Most super funds have reconciliation action plans with fluffy targets.

"But they're not tackling the real causes of disadvantage. That requires targeted financial education."

Communication is the missing link, she said.

"Are you talking our language? Are you explaining things in a way that makes sense for us?

"What does wealth look like for First Nations people? Retirement isn't just a white couple riding bikes or sailing through Europe.

"We have a sharing economy - a beautiful part of our culture. What matters most is each other, and retirement savings often means supporting your community."

Bennett urged funds and policymakers to invest in financial literacy programs tailored to First Nations experiences.

"We've had less generational wealth and far less access to education than most Australians.

"The system must recognise that if it's serious about inclusion."

The bigger question: what is super for?

The Financial Wellbeing Summit made one thing clear: while Australia's super system may be world-leading in size, its purpose is still up for debate.

For government, it's a story of growth, productivity and protection. For consumer advocates, it's about fairness, access and survival.

"The super system has achieved a lot," O'Halloran said. "But it's become a giant ball of savings.

"The challenge now is making sure it serves everyone - not just those who were already ahead."

Or, as one panellist put it, super may be growing, but unless equity grows with it, Australia's greatest savings story could become its biggest wealth divide.

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