Superannuation is not one of Keating’s crowning achievements

Superannuation is not one of Keating’s crowning achievements, by Judith Sloan.

It is becoming increasingly apparent that Australia’s system of compulsory superannuation is essen­tially a giant con. It forces workers to forgo current consumption to create a ­financial nest egg for retirement that in many cases simply knocks off their entitlement to the Age Pension and the various associated benefits. …

Across time, several rationales were invented to support the system, including the need to supplant, or at least supplement, the Age Pension and the need to boost national saving. This latter reason was quickly dismissed and is now rarely mentioned. …

Kelty understood that superannuation was an alternative means of securing money and power for trade unions in the context of falling membership, a trend he regarded as inevitable. …

In the meantime, one effect of superannuation has been to drive up house prices …

When it comes to the dependence on the Age Pension, it has to be said that superannuation has been a failure. The proportion of old people on the Age Pension has barely shifted (about 80 per cent) and the projections into the future point to little change to this figure. …

Note also that the government gives up considerable tax revenue on an annual basis by virtue of the concessional taxation of super­annuation.

The big winner is the finance industry. The great increase in funds under management generates a corresponding increase in fees.