Is super very super?

There are few, if any, certainties in life. Nevertheless, I am willing to put significant money on the real possibility that the September federal election will be decided by the votes of the rapidly growing ranks of seniors, many of whom are not happy chappies.

Right now, there are a number of issues that will determine where the oldies vote will go. One is the desperate shortage of Age Friendly Housing, while another is the blatant discrimination against Seniors who want to stay in the workforce or return to it. However, the most powerful one is the uncertainty and complexity of Superannuation, combined with the poor financial returns that come from it.

Let me lead you through a chat about my view of the basic principles of how a good National Superannuation Program could best be run, without commenting on any details of the complex legislation that has grown-up around it so ridiculously in Australia over two decades.

I was Chairman of National Seniors Australia when Paul Keating introduced Superannuation for all employees. Even though I was not a Keating fan, I strongly endorsed his initiative, believing that it was a fundamental step forward in preparing the nation for the economic and social impact of a greying world, in which pensions will have the potential to bankrupt every nation on the planet. I reckon that it will go down in the history of Australia as one of the most important pieces of social legislation since the arrival of the First Fleet.

Since the days of that heady start, Superannuation has gone progressively downhill, except for the wise decisions to raise the percentage of employer contributions from three to six to nine, and now to 12. The ever-growing regulations and governance that smother our Super are enormously difficult to understand and unnecessarily mind boggling. We are in this state because, in the 20 years since Keating, too many changes have been made for short-term political reasons, and none of them have improved the situation. Anyone managing their own Super Fund has to pay accountants and lawyers extraordinary fees because the ordinary punter simply is not able to handle it alone.

Believing that there has to be a better way to make Super simple and take a lot of the overbearing uncertainty out of it, I made a speech at the Taxation Summit in Canberra in October, 2011, asking for the Superannuation Act, and all associated regulations, to be put through the shredder in its entirety so that a new Act can be implemented that is capable of being read and understood by human beings.

Nothing has happened, even though I have also raised it regularly at meetings of the Government’s Superannuation Roundtable, of which I am a member. I don’t lay the entire blame for this at Bill Shorten’s feet. His predecessors did little to help and he has to bring the large Super Funds along with him when he implements changes. They spend too much of their members money lobbying vigorously to protect their cosy empires, the future existence of which utterly depends on keeping their members confused enough to stay with them. I can understand also why such a big change is not politically possible before an Election. Still, I live in hope that Bill will lead the charge for a better system, or that at least one of the major parties will make an Election commitment to do it. It will be very popular with Senior voters.

It seems to me that in preparing such legislation, these fundamentals need to be the core issues of positive stability for Superannuation.

• Every person who qualifies to participate in Super must be given every opportunity to build a capital sum which will provide them with an annual income which is greater than the Age Pension, including all the side benefits that a pensioner receives. This level of return will be achieved by using all of their funds annual income plus some of its capital. To achieve this, employer contributions may have to rise to 15 per cent.

• This capital sum can be planned to last until the beneficiary reaches the average age of life expectation. Within the next couple of decades, the anticipated average will reach to at least 90 years of age. This means that there must be no age restriction on the right to continue to contribute.

• No-one, for any reason, should be able to take all or part of their capital as a lump sum and decimate their Fund. Too many of those who now do this are known to go on to the Age Pension very quickly and defeat the whole purpose of National Superannuation.

• All Superannuants should have a choice of either drawing a defined monthly amount of income and capital or take out an annuity.