Superannuation has been endlessly fiddled with for three decades. Constant rule changes make it the most complex part of personal finance.
When compulsory superannuation was introduced, we were told it would gradually result in the government spending significantly less on the aged pension. This hasn't been the case, and today the superannuation system is actually a net cost to the budget. Even worse, Australians are forced to pay $36 billion in superannuation fees alone, which is inflated by the lack of real competition, which itself can only be fixed by making the superannuation system voluntary.
The reality is that different people have different savings needs based on their circumstances, and for many people it can be optimal to save a different amount, or save differently, or save at different times than currently mandated. Low-income people are particularly harmed, as they are forced to save when their incomes are low just so that they can spend that money later when their incomes are relatively higher. Middle-income people also don't benefit from the current system as it involves a large drop in their working life income for only a small change in their retirement income. While most people lose out from the system, the main winners are the big banks and big unions, who are able to control trillions of dollars of our money while taking the general public for granted.
Compulsory superannuation also heavily contributes to the “woke capitalism” phenomenon, by putting large chunks of Australia’s investment sector into the hands of a few industry-controlled super funds by default. Ethical investment charters have forced prospective start-ups to adhere to diversity and gender quotas, emissions targets etc. to secure investment due to this distorted market. We don’t support additional regulation of these funds but believe their existing market power is artificial and should be tested under more competitive and voluntary conditions.
Make superannuation voluntary. Employees should be given option of taking their entire income as PAYG income and opting out of superannuation contributions. Most employees will choose to continue building their retirement nest-egg through superannuation, but others will invest (creating more jobs and growing the economy) or spend it in other ways. The Libertarians are pro-choice when it comes to superannuation.
No more increases to default superannuation rates. We reject the increase from 10% to 12% as a dead-weight on business and employees, as well as the associated personal and compliance costs with constant changes.
- Simplify the superannuation industry. Self-managed superannuation funds (SMSFs) are notoriously complex, and there are too many barriers for new super funds to enter the market. We support the simplification of superannuation regulation, especially for SMSFs, which will give people more control over their own investment decisions and financial future.