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’


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


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


Everyone but Labor agrees superannuation is unfair

Over the past week, we seem to have hit a tipping point in the superannuation debate. It began when the lobby group for Australia’s industry funds, Industry Super Australia (ISA), unexpectedly admitted that Australia’s superannuation concessions structure is grossly unfair and weighted heavily in favour of higher-income earners: ISA said a person earning more than


Superannuation: a “resource wasting” tax avoidance scheme for the rich

Discussions about Australia’s retirement income system typically begin by reciting the political slogan that there are “three pillars” to the system — the age pension, compulsory super, and voluntary savings. It was the way the Abbott and Turnbull government’s tax inquiry looked at retirement incomes, and a frame of reference used by this government’s retirement


Proof superannuation robs workers of wages

By Brendan Coates, Matthew Cowgill and Will Mackey from The Grattan Institute, cross-posted from The Conversation: A key question for the government’s retirement incomes review is who ultimately pays for compulsory super contributions, especially since they are set to climb from 9.5% of wages to 12% over the next five years. Legally, they come from


Why Australia should scrap superannuation

Scrap Superannuation It fails to meet the standards of a retirement income system. It is costly and inefficient, as well as incredibly unfair. The age pension system is by far the most economically efficient retirement income system. Scrap superannuation. Expand the age pension. Boost the economy. Download the report as a PDF here. Executive Summary


Industry funds admit superannuation unfairly benefits the rich

The lobby group for industry superannuation funds, Industry Super Australia (ISA), has admitted that the superannuation concessions structure is grossly unfair and needs a radical overhaul: ISA said a person earning more than $124,000 a year – putting them in the top 10% of taxpayers – gets an average tax advantage on their contributions to


Peter Costello: Superannuation system is “inefficient”

Former Treasurer and chairman of the Future Fund, Peter Costello, is the latest to question the efficiency of Australia’s compulsory superannuation system, claiming that superannuation is not a genuine market and that it produces “inefficient” outcomes: Australia’s super system is not a genuine market and many retirement products are “inefficient”, Future Fund chair Peter Costello


Superannuation is robbing the pension system

The fake outrage of the Aged Pension taper rate has continued in the New Daily, which claims that the tightened pension assets test is leaving a growing number Australians in a “retirement trap”: Research by exchange-traded fund provider BetaShares found Australians with super balances between $350,000 and $600,000 at retirement age can shrink their income


Australia’s superannuation system a giant suckhole

Over many years, this site has shown that Australia’s compulsory superannuation system is an inefficient, costly monster that needs fundamental reform. Our critique has often been centred around the inefficient and inequitable way that superannuation concessions are distributed, which perversely gives the greatest tax concessions to those that least need it least and are least


Retail funds’ decade of superannuation underperformance

New data released by Chant West shows that industry superannuation funds easily outperformed their retail counterparts over the last decade: As shown above, the top 10 best performing superannuation funds over the decade were all industry funds, easily beating the average return of 7.9% per annum. The reason for retail funds’ underperformance likely relates to


12% superannuation will punish lower income earners

Research by Australian National University (ANU) associate professor, Geoff Warren, has warned that lifting Australia’s superannuation guarantee from the current 9.5% to 12% will hurt lower-income earners – a claim rejected by industry rent-seekers: MP Jason Falinski… said the ANU findings added to evidence that the scheduled rise was not in the best interests of


Compulsory superannuation drives wealth inequality

Dr Cameron Murray, co-author of the book Game of Mates, has published an interesting straw poll on his Twitter account seeking views on whether “Australia’s compulsory superannuation system make the ownership of assets in the economy more or less concentrated?”: Does Australia’s compulsory superannuation system make the ownership of assets in the economy more or


Superannuation rentiers to dominate Aussie economy

Rice Warner forecasts that Australia’s superannuation industry will have $7 trillion worth of assets under management by 2034, compared with $2.7 trillion at present. The firm also expects the sector to eventually be dominated by a handful of ‘megafunds’ that will dominate the Australian economy: The report predicts that the superannuation industry will dominate the


LIC and LIT commissions banned

Looks like the at once all powerful yet invisble MB has done it again. Via Chris Joye: In one of the biggest shake-ups of the financial advice industry in years, the government’s Financial Adviser Standards and Ethics Authority has blanket-banned conflicted sales commissions, including previously acceptable “stamping fees”, for advisers recommending listed investment funds to both retail