Industry funds drown in sea of superannuation lies

Australia’s industry superannuation funds continue to scaremonger against freezing the compulsory superannuation guarantee (SG) at the current 9.5%, warning that it will rob workers, leave taxpayers worse off, and increase inequality:

Industry funds are calling on the government to release a retirement income report which could potentially change the amount of superannuation paid by employers to their workers…

Industry Super Australia (ISA), which represents 15 industry funds… said the review could unwind the legislated increase in superannuation guarantee payments, which will force employers to pay 12 per cent in contributions to workers instead of the current 9.5 per cent…

According to ISA, eight million Australians would be negatively impacted by the scrapping of the scheduled rise in superannuation contributions made by employers.

“For an average 30-year-old couple working full time, cutting the super guarantee increase would deprive them of up to $200,000 in super by the time they retire,” ISA said…

“Super is already a great economic leveller for most Australians but we need to do more to avoid us ending up as divided nation, with millions of women and low-income earners scraping by just on the aged pension,” he said…

“The government needs to keep policy stable and stick with the legislated increases in super. That’s the proven and best way to get workers savings and the economy going again.”

The notion that the SG is paid for by employers is demonstrably false. It is paid by workers via lower take home wages. This was confirmed by the Henry Tax Review, the Reserve Bank of Australia, the Grattan Institute. and the Government paper announcing the establishment of compulsory superannuation in 1992, entitled Security in Retirement: Planning for Tomorrow Today.

Thus, lifting the SG by 2.5% would lower wage growth by a similar amount (other things equal), in turn reducing consumption across the economy. Given Australia is experiencing a deep recession, this constitutes an additional risk to recovery.

ISA’s claim that superannuation “is a great economic leveller for most Australians” could also not be more wrong. By reducing their take home pays, the SG hits lower-income earners especially hard, leaving them with less to live on.

The SG also increases inequality, since the lion’s share of concessions flow to high income earners:

So in actual fact, the superannuation system works more like a tax avoidance scheme for the rich than a genuine retirement pillar.

Finally, lifting the SG by 2.5% would worsen the long-term sustainability of the Budget. This is because the cost of superannuation concessions outweighs the benefits from lower pension outlays.

The main beneficiaries from raising the SG to 12% are superannuation funds, as they would be able to skim bigger fees from more funds under management. But this would come at the direct expense of ordinary Australians.

Unconventional Economist
Latest posts by Unconventional Economist (see all)


  1. Australian Super Guarantee – a festering economic and social failure, as well as an ‘industry (and retail fund) sea of lies’.

    Big lie #1. The aging population..
    Australia doesn’t have an inter-generational aging crisis – the Australian population age pyramid is right in the middle of the OECD / western world economy pack in worker to aged ratios & projections.

    Our main ‘aged or highly dependent’ intake is migrants – trafficked in to exploit our welfare and Medicare, low skilled, low socioeconomic, low or no contribution and highly dependent from birth to aged care – sucking up all the welfare, government services and then the pension. Many remaining as non Australians foreign nationals, for example the 0.5 million Chinese PR (part of the 1.4 million mainland born Chinese here) trafficked in as PR for the Australian pension and Medicare.
    Or the middle eastern or Indians. Working illegally, cash in hand, black market – giving ratios of only 1 taxation contributor to every 6 or more welfare or social dependents.
    👉🏾Shut down the third migrant intake, deport the 2.5 million migrant TR, restrict PR welfare only to net tax contributors (as most other countries do in non citizen foreign national residency) and that would restore Australia legal jobs and wages and the ability to afford a family.
    That see our population pyramid widen out with new Australian children born.

    Big lie #2. It’s an employer contribution.
    It’s not. It’s wages theft.
    Australian super is ‘in lieu’ of wages, contributing to the real wages loss along with the 2.4 million migrant guestworker destruction of Australian jobs in hiring, legal award & real take home pay.

    Big lie #3 It’s world class & economy of scale.

    The industry and retail funds take out over $30 billion in fees, charges and erosion of super funds.
    They are rated as among the most inefficient if not blatant theft of members contributions.

    Big lie #4 It doesn’t cost the Australian taxpayer.
    The current SG Scheme results in a cost of over $40 billion in Australia (to legal Australian employed) taxpayer subsidies.

    Yet Australian our aged care pension outlays are only $40 billion.

    Parliament of Australia / welfare what does it cost.

    Expenditure on the Age Pension is expected to grow from $40 billion to $72 billion in 2025–26 but not as a percentage of GDP.
    Expenditure on carer payments is also expected to rise, partly as a result of population ageing, from 0.5 to 0.6 per cent of GDP (from $7 billion in 2014–15 to $18 billion in 2025–26).

    The point of super was to shift the social obligation for the aged pension to individual in saving for their retirement.
    However all the evidence is that most current and future super contributors are increasingly burdened by debt and super is typically used to pay off that debt or at best provide a couple of years funding before they relying on the pension.

    So we have a taxpayer funded super scheme that is massively inefficient, preyed on by the industry and rrti fund (& life) industry, costs more than the benefit it provides and doesn’t achieve any of its primary goals of privatisation of a government social obligation.

    If we scrapped compulsory super – people would all earn more, could retire earlier (55 years old) and be paid a more generous pension.

    And all of Australia would be better off.