Key Highlights

  • The compulsory super guarantee reached 12% in July 2025.
  • Economic modelling suggests some workers could have more retirement cash than working-life income.
  • Projected outcomes depend heavily on investment return assumptions.
  • The research does not change the existing 12% legal requirement.

The compulsory super rate reached 12% of ordinary time earnings on 1 July 2025, and since 1 July 2026 employers have had to pay it on payday. Now a note from the e61 Institute asks whether the rate is too high. Economists Jack Buckley and Matt Nolan argue that, if future returns look like past ones, many workers could end up with more spendable cash in retirement than they had during their working lives.

What the e61 economists modelled

The note, published on 30 September 2026 in e61's budget61 series, is research and commentary. It is not a government proposal, and the 12% super guarantee remains law.

The authors used a lifecycle tax and transfer calculator applied to a weighted sample of 3,000 people drawn from the HILDA survey. The sample covers people who were under 21 in 2001, projected through to age 67.

They compared contribution rates of 9% and 12%. They assumed investment returns of 8% a year in nominal terms, after fees but before tax, and assumed people did no saving or borrowing outside super. The authors themselves describe the return assumption as high.

Their yardstick is a replacement rate: cash income in retirement compared with each household's average cash income during working life.

More cash after work than during it

According to the note, at a 12% contribution rate the average replacement rate exceeds working-age income for most individuals. Even at 9%, the average person in every income decile still ends up with more cash in retirement than while working.

The gap between the two rates is widest for higher earners. Lower-income households lean more heavily on the flat-rate Age Pension, so a change in the contribution rate affects them less, the authors say.

The note illustrates the trade-off with a job-loss scenario. A person out of work for two years at ages 31 and 32, with no other savings or borrowing, would live on JobSeeker of about $21,000 a year, yet go on to receive nearly $92,000 a year in retirement at a 12% contribution rate.

If that person could tap some super early to keep spending steady through the job loss, the modelled retirement income falls to about $75,000 a year. The authors say that is still 5.8% above the person's average lifetime income.

The caveats the authors flag themselves

The result is sensitive to returns, and the note says so. At 6.5% a year, roughly what a mortgage holder "earns" by parking cash in an offset account, most people would have about the same cash income in retirement as while working, and many would still have more.

At 5% a year, below the 10-year government bond yield, people in the top half of the income distribution would have less cash in retirement than during their working lives, assuming no other saving. Lower-income people would be less affected.