Keep it simple, or we can kiss those super benefits goodbye

The Australian

22 July 2019

Graham Richardson

Superannuation remains a complet­e mystery to me. The myriad rules and regulations under which it struggles to operate are beyond me as well.

In fact, it is hard to believe that many of the people who see the amount that goes into super taken out of their wages have ­little or no idea what happens to it. What is truly scary about this is that the Australian Prudential Regulation Authority had to concede that three funds out of a total of 11 had serious problems.

Few will even know the problem exists because years ago most of us knew our eyes were glazing over when some expert was trying to explain this arcane system.

Now trillions of dollars is being put into cash, equities and god knows what else and we don’t even question the wisdom of these investment decisions.

Instead, we have blind faith it will all work out in the end. We place our trust in trustees we don’t know and will never meet. With all this apparent success, there seems little need for concern. Sadly, the government is desperately searching for ways to curb the industry funds.

Conservative thinking in Australia has it that union officials are inarticulate, violent thugs and therefore there must be something corrupt about industry funds, even if they can find no evidence of wrongdoing. The fact that industry funds continually produce the kind of results that make them the best performers drives the conservatives to distraction. Mind you, for many of them that is a very short trip.

What I have not seen is any reduction in the take-up rate of pensions, yet the basic purpose of super is to give the workers a ­better retirement and lower the burden on the public purse.

Scott Morrison should be smart enough to forget about finding fault with industry funds and work co-operatively with them. There are times in politics when you have to admit failure, and this is one of them.

The current push is to allow people to use their super early: they want access to it to help put a deposit down for a house or unit or they may just be ill and need access to pay medical expenses.

In my view, we should be very wary of this approach. We have bank accounts we can draw on for these purposes but our super is something else again. If you pour all your prospective retirement income into your house, there will not be enough left to live with so you want to dip into your super again if there is sufficient still remaining. Convenient though this may be, it undermines the basic purpose of super to provide something extra in later years.

Putting on a new porch may seem important at the time but it is not the main purpose of super. If we allow a practice to develop whereby we can use super to improve our homes, a whole new field of rorts will be opened up.

The adage keep it simple, stupid, should be rigidly applied in this case.