Why super isn’t supposed to make you super rich

Already a subscriber?Q: I’ve never understood superannuation. What ought to be a simple business of saving and investing for one’s post-employment stage of life has been made so complex by tax concessions, a mandatory requirement for all businesses to provide superannuation and the ever-expanding government oversights and penalties for getting anything wrong. In my view, as someone in his 70s, it has made super a poor alternative to saving and investing.

And it couldn’t possibly be, given what it sought to achieve: a way for government to encourage Australians toOnly two out of 10 have super as their main retirement income during their 70s.While the encouragement for more Australians to retire superannuated came in the form of 15 per cent taxes and . This so-called forgone revenue has most recently been estimated at $50 billion a year.As far as the compulsory requirement for all businesses to provide superannuation to their employees, while the focus is on the fact that it has reached 11 per cent of the targeted 12 per cent of an employee’s wage income, a more realistic understanding is that for those currently retiring they will have received low or zero super support for around half of their working lives.

For six out of 10 of the 4.5 million Australians in retirement at present, the Centrelink age pension is their main source of income. Only two out of 10 have super as their main retirement income during their 70s. This entitlement fits with the government’s stated, but not yet legislated, objective of superannuation being a benefit that delivers income “for a dignified retirement, alongside government support, in an equitable and sustainable way”.

Unless they have been wealthy, Gen X, the children of the Baby Boomers, have not had the resources during their working lives to make higher contributions than their compulsory employer contribution.

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