When this is true as it is for a lot of people - that is the over saving problem - the Super system ends up as an inheritance subsidy. That's engineering a type of society that is widely considered to be undesirable. In the mid 20th century the rationale for inheritance taxes was that inherited wealth should not play a large role in society. The role of wealth in Australia is increasing and I for one don't think this is a good thing!

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I recognise that I actually 'feel good' about the fact that I have a somewhat ok super balance, which may be part of why everyone supports the super system. I think we may have all bought into the 'Keating is a legend fallacy' (because he's funny - no other actual reason) without understanding the full implications of our super system. The opportunities for rorting the super system are a big turnoff with it. This blog post I read a little while ago, or I listened to a podcast with you on super, and it's changing my thinking on super. One thing I do like about super is that it's like encouraging a form of public ownership of the means of production - everyday Australians benefit from the rise in profits. However this of course likely has political implications with people opposing corporate tax increases and still the largest proportion of people with shares being rich, so basically exacerbating income inequality.

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I read your article and noticed it appears to be based on the following scenario

Person in a medium to high income bracket

Pays private school fees

Secure and regular work

Expecting an inheritance in middle age


As you say, in this scenario, it may not be important to receive a super guarantee payment, from their employers, into their superannuation fund, for their later years. They are likely to have enough resources to manage comfortably without this extra employer payment.

However, people who are low to middle income earners, who aren’t homeowners and not expecting any inheritance later in life will need a source of continual income later in life, without it they aren’t likely to be able to manage rent payments and their continuously increasing health and medication fees. In old age their costs are likely to continue, if not increase.

Also, there’s this continuing assumption that employers would pay the 10.5% they currently pay as the Super Guarantee, to their employees in wages.

Employers are very unlikely to pass on cost/savings benefits, and even if they did it’s more likely to be a low 1-3% of the savings, not the whole 10.5%

Therefore, removing the Super Guarantee wouldn’t give any worker more money now to spend. It would just remove their future income source, making them more reliant on a very low old age pension, and for some increased poverty.

The removal of the Super Guarantee appears to only benefit employers, and certainly not most low to middle income earners, with few personal assets.

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But the performance of a standard balanced account in one of the industry super funds looks *nothing* like that! What wretched fund are you in? Not one of the bankster funds I hope!? The Australian Super balanced account is down about 8% from its January peak. But it is up about TWENTY percent (yes, 20%) over the recent pseudo-ZIRP years. Super has a lot of problems, some of which you identify, but at the end of the day it is a tax-advantaged and performing accumulation vehicle for those with the spare income to take advantage of it.

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