Everyone who studies the superannuation system closely learns its flaws. Here's why it is time to move on from "super is good, let's improve it" to "super is fundamentally flawed, let's scrap it"
> The seven-year gap between when you can spend all your super (age 60) and get the age pension (age 67), encourages people to stop working earlier, spend their super on travel, home renovations, cars and caravans, or on their children, and then get the age pension when they turn 67.
I can't believe the means testing for the aged pension is this shit.
lets assume that we abolish the superannuation system entirely, do we still means test the aged pension? Or we make it universal like other high income countries? As you said retirees are generally richer than the young. Even in the current system, the means testing for the aged pension is shit.
Personally I would have also liked to means test Medicare since that is also a transfer of money from the young to the old.
I have seen a few politicians on the right arguing similar things, though not from major parties.
A claim they also make is that you can't really talk about removing compulsory superannuation without understanding the political realities of the system. In effect, if you control such enormous amounts of capital then you have enormous influence. For example AustralianSuper has 341B under management. Its CEO and Chairman look to be (from a quick wikipedia glance) similarly politically aligned.
I haven't dug into (or thought about) this extensively myself, but wondering if you have any thoughts?
Senior positions in Super funds are little lollies to hand out to politicians who do favours too. It's like a huge slush fund. So I get why those who don't like super cementing union power want to unwind the system. That's a fair point.
Yeah for sure. I think it's worth acknowledging because without understanding what non-economic reasons drive the thing to exist it will be hard to dismantle it. It's an issue I care a lot about - mandatory superannuation is surely one of the biggest scams in Australia.
It’s quite simple - people should be able to make their own decisions about their finances. And indeed life. Provide incentives to save but don’t mandate it.
As an economics student keen to get involved with novel concepts for improving our country, I read this piece hoping to pick up an interesting perspective. Unfortunately, this is so poorly presented it's laughable.
Your graphs are either intentionally misleading or unintentionally atrociously designed. I don't know which is worse. Your flippant comments on making "double the average salary" prior to retirement only to show data which depicts a 20% increase on your 25-34 year old salary are incredibly out of touch.
There might be some valid conversations to be had on whether the super industry takes more than it gives, but when you surround the conversation with strawman takes it's impossible to take seriously.
I can't help but feel that your investment in the property market has led to malicious takes like this.
Also, calling people out for wanting to retire at 60 is the type of dehumanising commentary which hurts the economics profession. Be better.
Thanks for your comment. I’m very open to improving chart designs. No complaints here. I’ll surely do that at some point soon.
I’m not really sure what other arguments you are making. Yes, I said “IF” you make twice the average salary you probably don’t need to target 70% replacement. That’s not the same as the data. It’s just an example of the strange objective we have.
On people at age 60 retiring, this is totally normal and common economic reasoning — it’s the same reasoning that justified raising the age pension age from 65 to 67 and the same reasoning that in general is used widely in policy to encourage workforce participation.
My issue with this take is feels centred around keeping anyone below upper-middle class poor enough to ensure they keep working. They would then roll onto the age pension which you positively claim is effective at keeping people out of poverty. I don't accept the poverty line as reasonable living standard we should be discussing in Australia.
You're a smart guy who I'm sure is earning double the average wage. You could definitely squirrel a bit away for retirement without forced super, but a growing majority who aren't as lucky are going to end up dependent on the pension. With an aging population and growing deficit, creating more dependency on a smaller tax base sounds like a recipe for disaster to me. If you have a more in depth analysis on how this deficit would be offset by releasing additional consumption, I'd love to see it. Based on current trends - it appears a whole lot would flow into our famously unproductive asset of housing.
All this to boost house prices even further? Can't see the light in this tunnel.
The idea of locking away income when people are trying to same and/or pay off their mortgage is ridiculous and only serves the profits of banks. But, realistically, no government will support scrapping superannuation. I have been a long believer of allowing preserved super investment in a principal residence. It is less inflationary than SMSF investment properties and is a balance for both home ownership and the intent of super. It makes sense given more and more retirees are taking lump sums to pay off their mortgage.
The idea of locking away income when people are trying to same and/or pay off their mortgage is ridiculous and only serves the profits of banks. But, realistically, no government will support scrapping superannuation. I have been a long believer of allowing preserved super investment in a principal residence. It is less inflationary than SMSF investment properties and is a balance for both home ownership and the intent of super. It makes sense given more and more retirees are taking lump sums to pay off their mortgage.
The idea of locking away income when people are trying to same and/or pay off their mortgage is ridiculous and only serves the profits of banks. But, realistically, no government will support scrapping superannuation. I have been a long believer of allowing preserved super investment in a principal residence. It is less inflationary than SMSF investment properties and is a balance for both home ownership and the intent of super. It makes sense given more and more retirees are taking lump sums to pay off their mortgage.
> The seven-year gap between when you can spend all your super (age 60) and get the age pension (age 67), encourages people to stop working earlier, spend their super on travel, home renovations, cars and caravans, or on their children, and then get the age pension when they turn 67.
I can't believe the means testing for the aged pension is this shit.
lets assume that we abolish the superannuation system entirely, do we still means test the aged pension? Or we make it universal like other high income countries? As you said retirees are generally richer than the young. Even in the current system, the means testing for the aged pension is shit.
Personally I would have also liked to means test Medicare since that is also a transfer of money from the young to the old.
I have seen a few politicians on the right arguing similar things, though not from major parties.
A claim they also make is that you can't really talk about removing compulsory superannuation without understanding the political realities of the system. In effect, if you control such enormous amounts of capital then you have enormous influence. For example AustralianSuper has 341B under management. Its CEO and Chairman look to be (from a quick wikipedia glance) similarly politically aligned.
I haven't dug into (or thought about) this extensively myself, but wondering if you have any thoughts?
Senior positions in Super funds are little lollies to hand out to politicians who do favours too. It's like a huge slush fund. So I get why those who don't like super cementing union power want to unwind the system. That's a fair point.
Yeah for sure. I think it's worth acknowledging because without understanding what non-economic reasons drive the thing to exist it will be hard to dismantle it. It's an issue I care a lot about - mandatory superannuation is surely one of the biggest scams in Australia.
Yes, there is a lot of political power going to the asset allocators of the super system. I wrote about that in RIGGED
You might be interested in this:
https://www.taxresearch.org.uk/Blog/2025/07/09/the-fundamental-pension-contract-2/
It’s quite simple - people should be able to make their own decisions about their finances. And indeed life. Provide incentives to save but don’t mandate it.
As an economics student keen to get involved with novel concepts for improving our country, I read this piece hoping to pick up an interesting perspective. Unfortunately, this is so poorly presented it's laughable.
Your graphs are either intentionally misleading or unintentionally atrociously designed. I don't know which is worse. Your flippant comments on making "double the average salary" prior to retirement only to show data which depicts a 20% increase on your 25-34 year old salary are incredibly out of touch.
There might be some valid conversations to be had on whether the super industry takes more than it gives, but when you surround the conversation with strawman takes it's impossible to take seriously.
I can't help but feel that your investment in the property market has led to malicious takes like this.
Also, calling people out for wanting to retire at 60 is the type of dehumanising commentary which hurts the economics profession. Be better.
Thanks for your comment. I’m very open to improving chart designs. No complaints here. I’ll surely do that at some point soon.
I’m not really sure what other arguments you are making. Yes, I said “IF” you make twice the average salary you probably don’t need to target 70% replacement. That’s not the same as the data. It’s just an example of the strange objective we have.
On people at age 60 retiring, this is totally normal and common economic reasoning — it’s the same reasoning that justified raising the age pension age from 65 to 67 and the same reasoning that in general is used widely in policy to encourage workforce participation.
Thanks for the reply - to clarify my point:
My issue with this take is feels centred around keeping anyone below upper-middle class poor enough to ensure they keep working. They would then roll onto the age pension which you positively claim is effective at keeping people out of poverty. I don't accept the poverty line as reasonable living standard we should be discussing in Australia.
You're a smart guy who I'm sure is earning double the average wage. You could definitely squirrel a bit away for retirement without forced super, but a growing majority who aren't as lucky are going to end up dependent on the pension. With an aging population and growing deficit, creating more dependency on a smaller tax base sounds like a recipe for disaster to me. If you have a more in depth analysis on how this deficit would be offset by releasing additional consumption, I'd love to see it. Based on current trends - it appears a whole lot would flow into our famously unproductive asset of housing.
All this to boost house prices even further? Can't see the light in this tunnel.
The idea of locking away income when people are trying to same and/or pay off their mortgage is ridiculous and only serves the profits of banks. But, realistically, no government will support scrapping superannuation. I have been a long believer of allowing preserved super investment in a principal residence. It is less inflationary than SMSF investment properties and is a balance for both home ownership and the intent of super. It makes sense given more and more retirees are taking lump sums to pay off their mortgage.
The idea of locking away income when people are trying to same and/or pay off their mortgage is ridiculous and only serves the profits of banks. But, realistically, no government will support scrapping superannuation. I have been a long believer of allowing preserved super investment in a principal residence. It is less inflationary than SMSF investment properties and is a balance for both home ownership and the intent of super. It makes sense given more and more retirees are taking lump sums to pay off their mortgage.
The idea of locking away income when people are trying to same and/or pay off their mortgage is ridiculous and only serves the profits of banks. But, realistically, no government will support scrapping superannuation. I have been a long believer of allowing preserved super investment in a principal residence. It is less inflationary than SMSF investment properties and is a balance for both home ownership and the intent of super. It makes sense given more and more retirees are taking lump sums to pay off their mortgage.