It could have been a SUPER idea

Equity

Between 1960 and 1990 many of the funds set up by private firms invested all their workers' superannuation in the firms where they worked. Lots of such superannuation funds went to the wall before the workers could draw on them. Other fund managers embezzled the bulk of the money. Nowadays better prudential arrangements are in place and the would be rorters have to be a bit cleverer. The people who, in Arthur Daly's terms, are on to "a nice little earner" are generally doing it by the book: it is just that they get exorbitant salaries for advising on which shares to purchase or sell.

In the widespread European social insurance style of superannuation, the amount people receive in superannuation is determined by the government and is roughly in line with the individual countrys' capacity to pay.

In Australia, the bulk of defined benefit schemes are now closed to new members. As a result, the amount of superannuation received is proportional to the amount paid in, the wisdom of the funds investment advisors and just plain luck. Under such systems John and Michelle might have started work on the same day, made identical superannuation contributions for 25 years to different superannuation companies and end up in very different financial circumstances.

Even Industry Funds provide members with a range of investment options,such as: high growth, cash, balanced, socially responsible and so forth. Lucky members might make all the right decisions and maximise their returns whereas their work colleagues making different decisions might end up with far less. The "choice" offered is really a Hobson's Choice when most of us have little knowledge of the finance system.

The percentage of women with some superannuation may well be much greater than the 22 % it was in 1986 but, because they earn on average about two thirds of the salary men receive, because they have the bulk of caring responsibilities foisted upon them and as a consequence have interrupted employment histories and often sacrifice their career when husbands are transferred, they don't receive anything like the equal superannuation payment they would under a social insurance model.

The Community Development Employment Program (CDEP) has been operating on Aboriginal Communities since 1976 but even when Aboriginal people worked 5 days a week they never received superannuation. The Gillard Government has converted the CDEP in the Northern Territory into a welfare program so that it can put half the salary onto a Basics Card which can then only be used to make approved purchases. Because Aboriginal people live on average 17 to 20 years less than other Australians even if they had access to superannuation they would get far fewer benefits than do other Australians.

Many Australians have seasonal, casual or part-time employment. Many of their employers either don't deduct superannuation contributions or if they do don't pass them on to the superannuation funds. Even if such employees' superannuation contributions are paid into a fund, because of the short term nature of much of this employment, workers end up with their superannuation scattered over a number of funds where the bulk of their contributions are eaten up in fees.

The banking and insurance superannuation funds generally charge higher management fees than do Industry Funds and this erodes the final payout amount received when people in these schemes retire.

Professor Gerry Hughes from University College Dublin compared the Irish privatised superannuation with the New Zealand State funded superannuation and concluded that the New Zealand system was far more equitable.

Pragmatic government

Hawke and Keating wanted privatised superannuation to help ease the cost of age pensions of an aging Australia and to increase private savings. The leaders of the big unions wanted superannuation to help boost their flagging power base and to give them some control over industry decisions. The general public wanted it because they did not like the way the government used the pension system as a control mechanism, they had not been adequately informed of the viable alternatives by religious and secular leaders preoccupied by other things and many people were driven by the belief that they would receive disproportionately more than their fellow citizens if privatised superannuation was introduced.

So Australia finished up with a superannuation system which provides greater financial benefits to the rich (by way of foregone tax) than it pays to the poor. Hundreds of thousands of the richest obtain more in benefits from this system each year than do the poorest age pensioners. A social insurance superannuation system would be far more equitable but it is still not the best option. The reason it is not the best option is that superannuation is a mechanism designed to cope with old age and invalidity.

The best option would be one which would guarantee every permanent resident an income sufficient to allow everyone to live in austere dignity whatever their circumstances. It would protect them when they were young, when they needed to retrain or study, in times of temporary illness or unemployment, family separation, old age or permanent incapacity. Such a system is called a Basic Income and is being seriously considered by several governments in Africa, South and North America and Europe.