How safe are the Australian superannuation (retirement) accounts from Australian governments? Henry Ergas writes in The Australian:
In theory, putting your jewels in a safe protects them from theft. In practice, thieves know safes are where the jewels are kept. And if the thief has a key, you’re in trouble.
That, in a nutshell, is the story of super. There are, no doubt, many twists in the saga; but all the latest episode confirms is that when they are desperate for cash, governments can be trusted to breach whatever trust we have placed in them.
Low interest rates, set by bureaucrats (at central banks) rather than the markets, have greatly lowered the incomes of those living off savings:
In a world in which interest rates are low and returns volatile, will the new caps on concessional and non-concessional contributions really permit Australians whose incomes are reasonable, but not stratospheric, to achieve acceptable replacement rates when they stop working?
The purpose of super has been lost. It’s just devolved into a bun-fight.
…our taxation of superannuation [has] high effective tax rates on earnings that impede even lifelong savers from accumulating the balances they require. Yet there is no sign of any willingness to subject those arrangements to comprehensive review.
That may be because no one really believes in the system any more. Instead of being considered the cornerstone of income adequacy in old age, super has become merely a saving vehicle that is less harshly taxed than the alternatives.
As for the virtue of providing for oneself, when was the last time it was mentioned with a straight face?
The gimmedats are going to get into your super:
Labor … has framed the debate, to the point where the age pension, whose function was to alleviate poverty, has become the accepted point of reference. Everything else is portrayed as a “concession”, as if the superannuation system’s role was not to allow savers to redistribute their own income from the present to the future, but instead to help redistribute income from the people who saved it to those who would like it to spend.
Governments are locked into record and unsustainable levels of welfare spending by the bidding war that goes on at each election, previously enabled by the huge bubble in money manufacture from 1982 to 2008. But that bubble, while not pricked, is paused — kept from collapsing by central banks measures such as lowering interest rates to near zero. Something has to give in the next decade. An awful lot of promises have been made — implicit in the value of a dollar remaining close to where it is now — that are not going to be kept. The politicians will decide which promises are broken, who the winners will be, and who are the people who now think they are better off than they will turn out to be.
See the graph in One in two Australian voters is fully reliant on public welfare.