Productivity Commission super report: apply the Medicare approach to super

And here's the thing; for all its expense, the whole system actually facilitates the very thing it should be guarding against. Because what protection it offers against poor investment choices or malfeasance is delivered through this thicket of professional documentation, it's not a problem for spruikers who travel, like piranhas, in schools. They'll connect Mum and Dad to professionals who'll draft or re-draft their investment strategy and ensure their investments comply with it – to facilitate their high-risk, high-fee schemes.

You'll understand, gentle reader, that when I read the PC's sub-heading "SMSF regulation is appropriate", my gob was truly smacked and smacked again.

Abraham's advice on governments doing what we can't do for ourselves leads me to one other conclusion. Decades ago 'defined benefit' super funds guaranteed their beneficiaries specific benefits with the funds bearing all the risk on investment returns. This was unwise and unsustainable. But we've swung too far in the opposite direction, with 'defined contribution' schemes that load all investment risks on beneficiaries. Too bad if you're in an unlucky generation.

Government – and only government – could offer an insurance product for super funds to dampen their beneficiaries' exposure to systemic risk. For illustration's sake, up to some cap for each person, for every $1 of premium paid annually, government might pay $15 in the event of some specified period of sufficiently poor performance of a representative basket of investments.

Rather than being welfare, this would be a trade for risk-taking. Premiums would be calculated to generate some expected profit in return for risk borne.

This is a win-win. No-one need buy the insurance, but those who did would be advantaging their beneficiaries. And, though it would take large losses occasionally, in any period the government would expect to bolster its budget bottom line.

With an election coming on, any of the parties could grab hold of the policy. I can see it now. Superannuation of the people, by the people, for the people. Win-win-win.