Page 1 of 2

Jeffrey Hutton is a Morningstar contributor.

Lower concessional limits for contributions into superannuation funds will wipe $1 trillion off the value of self-managed super funds (SMSFs) by 2030, a new report by Deloitte says.

The value of SMSFs will climb to $2 trillion by the end of the next decade, $1 trillion less than expected, according to the consultancy's "Dynamics of the Australian Superannuation System - The Next 20 Years" report, published this week.

The federal government caps the amount anyone under 50 can stash into super to no more than $25,000. Any amount over that doesn't get the concessional tax rate of 15 per cent. The lower-than-expected limit highlights that the limits may be a blunt instrument, because they deny those who had limited spare cash in their younger years from making up for lost time as their earnings improve.

"The limits need to be more sophisticated," says Wayne Walker, partner, actuaries and consultants at Deloitte.

"The limits should consider what people have been able to save over their lifetime."

But with average SMSF accounts much larger than industry or retail funds, the study underscores that when it comes to superannuation, apathy breeds penury - not only because we are not saving enough but because we are living longer, the report says.

More than three quarters of Australians will outlive their superannuation. Half of the Australian population is expected to live beyond the standard expected 85 years for men and 88 years for women, the report says.

There's every chance that new developments such as MySuper, the federal government's default superannuation account, and maybe even the increase in superannuation guarantee from 9 per cent to 12 per cent, could re-enforce that apathy, Deloitte says.

"(MySuper) has the potential to make the unengaged even less engaged," says Russell Mason, partner, actuaries & consultants at Deloitte.

"We still need to work on engaging and educating members."

The total value of superannuation accounts will grow to about $6 trillion by 2030 from $1.4 trillion currently. Spurring the growth will be population growth, a growing number of accounts and a $408 billion fillip by 2030 thanks to the increased superannuation guarantee.

Post-retirement assets will represent a growing pool of savings, comprising 22 per cent of accounts by 2030.

Even so, as the federal government tables the legislation that provides for the staged increase in compulsory contributions, most people nearing retirement in the next couple of decades will probably find they don't have enough.

A single man retiring with an account balance of $217,000 and taking an income of $22,000 a year has a 78 per cent chance of outliving his retirement benefit, the report says.

"Retirement adequacy will continue to be a major concern for many Australians," says Walker.