Superannuation funds beg for RBA bail out

Some of Australia’s superannuation funds are facing a liquidity crunch due to holding illiquid unlisted assets at the same time as the Morrison Government is permitting members to make early redemptions: Jeremy Cooper, Chairman of Retirement Income at Challenger Limited and formerly the Chair of the government’s Super System Review in 2010… warns that there


Superannuation nest eggs smashed by ASX crash

The past month has been one of the worst on record for the Australian share market and by extension our superannuation system, which is among the most heavily concentrated in equities in the world. The bellwether All Ordinaries Index, which tracks the 500 largest companies listed on the Australian Stock Exchange (ASX), has lost fully


Super funds to “freeze” on cash run

Via The Australian: The government’s surprise move to allow broad-ranging early access to super to Australians of all ages has sparked fears major funds may “freeze” withdrawals in the face of a torrent of applications to the scheme. Critics of the plan that allows Australians facing financial stress to take out a total of $20,000


Superannuation’s biggest flaw: Market risk

This site has gone to great lengths to expose the critical flaws in Australia’s system of compulsory superannuation and to explain why superannuation is not a genuine retirement pillar. These problems can be broken down into five key areas. First, superannuation is voluntary for those that are self-employed, casually employed, or homemakers. Therefore, it misses


Superannuation cure “worse than the disease”

The Australia Institute (TAI) released startling research on the growing cost of Australia’s compulsory superannuation system, which is costing the federal budget much more than it saves in Aged Pension costs: Superannuation tax concessions are almost as big as the cost of the age pension. They’re also growing at twice the rate of the age


Abandoning mandatory superannuation the “best possible stimulus”

The Australian Adam Creighton has tweeted suggesting that freezing compulsory superannuation contributions would provide the economy with the “best possible stimulus”: The best possible stimulus would be suspension of mandatory superannuation contributions, supercharging take-home pay by around 10 per cent and avoiding the waste that accompanies government spending.#auspol — Adam Creighton (@Adam_Creighton) March 9, 2020


Gender inequality highlights superannuation’s epic failure

The faux outrage over women’s lower superannuation savings in retirement has hit fever pitch, with range of commentators demanding action. For example, South Australia’s Equal Opportunity Commissioner claims the superannuation system is failing women: Superannuation, or rather the lack of it, is a huge problem for women. The super system works pretty well if you


ANU to test if compulsory superannuation lowers wages

The Australian National University (ANU) has been commissioned by the Morrison Government to test whether raising the superannuation guarantee to 12% would lower Australian wage growth: Appearing before a Senate Estimates committee on Thursday, Robb Preston, the manager of Treasury’s retirement income policy division… said the ANU’s tax and transfer policy institute, a well-respected policy


Compulsory superannuation is failing low income Australians

The Grattan Institute has released its submission to the federal government’s Retirement Incomes Review, which explicitly argues that Australia’s system of compulsory superannuation is failing lower-income workers. Grattan also argues that instead of lifting the superannuation guarantee, which would cost the Budget an additional $2 billion a year, the government should instead bolster the Age


Australia’s superannuation system is driving inequality

Chief economist of The Australia Institute, Richard Denniss, is the latest commentator to expose the gross inequity of Australia’s compulsory superannuation system: This year, the government will spend more than $41 billion on tax concessions for superannuation with the stated purpose of helping people save for their retirement. But the way the rules are designed


Industry funds admit 12% superannuation will benefit rich

The lobby group representing industry superannuation funds, Industry Super Australia (ISA), has admitted in its submission to the Retirement Income Review that lifting the superannuation guarantee (SG) from the current 9.5% to 12% will primarily benefit high income earners: According to ISA modelling, the benefit of a higher SG rate will be weighted heavily to


The superannuation vampire is bleeding the federal budget

Actuarial firm, Rice Warner, is the latest to acknowledge that Australia’s superannuation system costs the federal budget more than it saves in aged pension costs, and estimates that raising the superannuation guarantee (SG) from 9.5% to 12% would cost the economy 0.22% of GDP “through this century”: The Australian government gave up A$41bn (€25bn) in


Women’s group lobbies against 12% compulsory superannuation

Over the past month, we have witnessed various groups call for explicit government intervention to bridge the discrepancy between male and female superannuation savings. It started when the ACTU demanded the superannuation guarantee be lifted to 15% for women. Shortly afterwards, KPMG requested the government make direct contributions into women’s superannuation accounts, which was echoed


Superannuation increase means 20% lower wage growth

Labor leader, Anthony Albanese, last week attacked “an unholy coalition attacking the increase in the Superannuation Guarantee”: At the moment we are witnessing an unholy coalition attacking the increase in the Superannuation Guarantee. They want to see super wound back or abolished. The prescriptions of ACOSS and others play into the hands of the Liberal


Retirees aren’t worried about their retirement

While a lot of Australians fear retirement, they don’t appear to mind the reality, according to the latest NAB wellbeing index: Not having enough money to finance retirement remains the top cause of financial anxiety for Australians, but the concern greatly diminishes once people retire, National Australia Bank’s latest wellbeing survey shows… But NAB’s survey


Labor flogs superannuation dead horse

Labor leader Anthony Albanese yesterday gave a speech to the Queensland Media Club where he confirmed Labor’s unwavering support for lifting the superannuation guarantee to 12%: The pension is just one pillar of the retirement income system. The second pillar was built by the Hawke-Keating Labor Government, which is universal superannuation. This further extended Australians’


Scrap superannuation tax breaks, raise the pension

Melbourne University professor, Kevin Davis, who was a panel member on the 2014 Murray Financial System Inquiry, is the latest in a conga-line of commentators calling for a universal Aged Pension to be applied funded by reining in superannuation tax breaks: Gifting all retirees the age pension while restoring a personal tax rate on superannuation


Compulsory superannuation is fueling household debt

There is a common myth that Australia’s compulsory superannuation system has boosted national savings. However, Fidelity International has challenged this misconception, arguing instead that superannuation is fueling the growth in Australia’s household debt, which is now the second highest in the world (see next chart), by forcing households to borrow more to offset the forced


Compulsory superannuation misses 2 million workers

The Actuaries Institute’s submission to the federal government’s Retirement Income Review has warned that the growth in insecure work (the ‘gig’ economy) means a growing share of Australian workers are not covered by compulsory superannuation, leaving them reliant on the Aged Pension: Self-employed workers are not included in the SG [superannuation guarantee] system but may


Forget superannuation, lift the Aged Pension

In its submission to Treasury for the Retirement Income Review, Mercer has called for a universal non-means tested Age Pension to be considered in place of raising the superannuation guarantee: Mercer senior partner, Dr David Knox, said a universal Aged Pension with the right tax structure would be feasible without a substantial impact to the


Raising women’s superannuation is not the answer

This week, there have been multiple calls for the government policy to boost women’s superannuation contributions in order to bridge the gap in retirement savings between women and men. It began when the Australian Council of Trade Unions (ACTU) demanded that the superannuation guarantee be lifted to 15% for women. This was followed by KPMG


Superannuation is “the biggest rort in Australia”

Opposition to Australia’s compulsory superannuation system continues to build with Liberal-National Party senator for Queensland, Gerard Rennick, describing superannuation as “the biggest rort in Australia” and demanding that it be made voluntary: A Liberal-National senator has called for superannuation to be voluntary, describing the $3 trillion retirement savings scheme as the biggest rort in Australia…….


Unions blind deaf and dumb on Superannuation

The Australian Council of Trade Unions’ (ACTU) submission to The Retirement Income Review has demanded that the legislated increases in the superannuation guarantee to 12% be maintained for men and lifted to 15% for women: Australian workers have been left out in the cold and are paying the price for the Coalition Government’s freeze on


Compulsory superannuation rise killed-off by RBA

Last week, The Grattan Institute released explosive research showing that lifting the superannuation guarantee from 9.5% to 12% would unambiguously lower workers’ wage growth: On average 80% of the cost of increased compulsory super contributions was passed on to workers through lower wage rises than would have been expected over the life of those agreements.


More proof superannuation isn’t a genuine retirement pillar

In his explosive expose’ on Australia’s compulsory superannuation system (here and here), Dr Cameron Murray argued that superannuation is not a genuine retirement policy because, among other things, it can be with withdrawn well before the official retirement age of 66 (rising to 67): Among other things, super can be spent many years before retirement,


Australia’s retirement system needs radical reform

From The Conversation: The government’s retirement income review is being told our current tax and benefit treatment of retirement incomes is a mess. Much of financial planning industry is devoted to structuring affairs to maximise access to the age pension. The means test and other requirements that control access to it are a bureaucratic nightmare