Super could be super

Article published 3 February 2021

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WHAT you have to live on once work stops is too important to continue to be an issue fought over by just vested interests. We seem to be forgetting there’s the small matter of super members and their wellbeing.

It really doesn’t matter whether we contribute 9.5%, 12% or even 15% to superannuation. What matters is if we have enough to live on in retirement.

The recent retirement income review sets enough-to-live-on at between 60% and 70% of your wages. That’s fine if you’re on, say, $90,000 a year, but what about the people who are on a minimum wage of $39,200, provided they are fully employed, which few are? Does between $23,500 and $27,500 in retirement sound enough to you, when during your working life you haven’t been making enough to buy a house and you will somehow have to find the money to rent until you die?

Instead of focussing on the compulsory contribution rate, super funds should be required to offer workers an integrated product. Funds should put together offers that spell out what level of income you will get in retirement for what level of contribution and to what extent the Age Pension will supplement your superannuation pension.

Incredibly, this is not generally on offer right now.

You go with a certain super fund while you are working but neither you nor your fund has the slightest idea how all your contributions and investment earnings are going to be used to ensure you have enough to live on until you die.

Rather than spruiking their investment returns, funds should be explaining their pension plans to workers. Trouble is, funds generally don’t have anything meaningful to say in that regard. It’s about time they got cracking.

At the same time, the Australian Government should set an adequate retirement income level and review it periodically. This adequate retirement level should be tied to the availability of tax breaks which currently and very disproportionately favour the wealthy.

Think of all the savings the Government would achieve once it stops using tax breaks to stuff the super balances of people who would also be perfectly alright without tax breaks. Those savings might even fund a permanent increase in the Age Pension and the JobSeeker Payment (over 318,000 people over 55 are forcibly retired with little chance of finding a job).

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