Australia's superannuation system is not adequate to support an ageing population and will require significant reform if it is to sustain the economy, a CEDA audience in Sydney heard.

BT Financial Group, CEO, Brad Cooper said while Australia had one of the largest private pensions systems in the world relative to GDP, it would be a failure to many.

Few retirees have any idea about their superannuation balances and most do not know how much money they would need to sustain their retirement, Mr Cooper said.

"People younger than 35 …should be making voluntary contributions today, topping up their compulsory superannuation," he said.

"It would be far more efficient I believe to give them incentives to do this now rather than make generations of the future pay for the aged pension."

Forum speakers also included Shadow Assistant Treasurer and Shadow Minister for Financial Services and Superannuation, Senator Mathias Cormann and Actuaries Institute, CEO, Melinda Howes.

The forum heard:

• By 2033 around 25 per cent of the population will be over the age of 65 with just over three people working for every retiree - down from five people today.
• Life expectancy will be longer. By 2023, men will live to 91 years and women will live to 93 years. This means people born after 1968 will need to work out how to support themselves in retirement for more than 30 years.
• Around 37 per cent of Australians don't look at their superannuation at all and 33 per cent of people who have their money in default funds don't know who manages their money on their behalf.
• New financial products need to be developed to support people in the frail stage of their retirement. These must be backed by new forms of long term assets such as mortgage funds, venture capital funds or a liquid corporate bond market for infrastructure projects.

A 20-year old who entered the workforce today on the average salary of $72,000 per annum, and contributed only the compulsory 12 per cent at the current five per cent rate of return, would only achieve 51 per cent of income replacement if they retired at 65, Mr Cooper said.

Even people earning $90,000 and $120,000 a year would also have a large shortfall - they would be replacing just 45 per cent and 37 per cent respectively, he said.

"We can't have such a large proportion of the population (around a quarter) just subsisting. We need them spending - in restaurants and on entertainment and on other discretionary spending to stimulate the economy," he said.

"Australians need to understand the benefits of topping up their compulsory super, the benefits of advice and reviewing their super, and the benefits of preparing for retired life, rather than simply relying on the superannuation guarantee and the pension.

"Engagement of members will be the ultimate key to super because when they care, they will put a lot more effort into getting retirement planning right and hold everybody in the system to account."

Mr Cormann said changeable tax rules around superannuation had undermined saving for retirement. The $1.5 trillion "honey pot" of superannuation savings must be off limits as a means of plugging budget holes, he said.

"In government, the Coalition will not make any unexpectedly instrumental changes to super because the message we have heard loud and clear from people as they are saving for their superannuation is that they are sick and tired of government fiddling with superannuation every time there is a short term budget issue," he said.

"Over the last six years we've had at least 10 changes to superannuation taxation arrangements which have raised more than $8 billion in additional revenue for the government so far."

A Coalition government would give the Australian Taxation Office discretion to allow people to redress inadvertent breaches of concessional and non-concessional contribution caps without penalty, he said.

These penalties were unjust for people who were "fundamentally trying to do the right thing by saving," he said.

Ms Howes said Australians face a range of risks in planning for their retirement, particularly investment risk or fluctuations in capital returns, inflation risk and outliving their money.

She said Australians' life expectancy has kicked out an extra 30 years over the last 100 years and would continue to do so, creating a retirement life that would mostly be active and fulfilling.

"Understanding our own longevity is a real issue for us as a nation. The impacts on the economy are likely to be bigger than the predictions of the intergenerational report," she said.