Top ten problems with our super system, and how to fix them

How to fix it. If the government creates superannuation and retirement policy in line with its Retirement Incomes Policy there is absolutely no reason to make radical changes to the super rules. And if the government does need to make changes, due to budgetary concerns or to improve the system, then it should be honest about the reasons, rather than making spurious claims the rich are rorting super. For making these comments, Prime Minister Kevin Rudd and Treasurer Wayne Swan owe an apology to any Australian taking responsibility for their retirement by making additional super contributions.

2. Hello! It’s all about the member (lack of consumer representation)

The retail fund industry is warring with the industry fund sector over which type of fund is the cheapest, which has the best returns, and how often unlisted assets are valued. The financial advisers are defending their market share by reluctantly relinquishing commissions sometime in the future, but quietly retaining the commission structure on existing products.

The industry association, ASFA, is claiming that many SMSF trustees are incapable of looking after their own super interests, and should be licensed, while the entire industry and government seem to be ignoring the important role accountants play in the lives of Australians saving for retirement.

And, shouldn’t these discussions be about the member - the consumer?

The government has set up an industry advisory group with no representation from accountants, or consumer groups, or incredibly SMSF trustees (see: Another super review: Who’s looking out for consumers?).

Although the chair of the panel, Jeremy Cooper, and the five part-time panel members have excellent credentials and years of industry experience, again, there is no representation for consumer groups, or from organisations representing SMSF trustees.

How to fix it. Appoint one or more of the following organisations and associations to its industry advisory group, or a leading consumer advocate to its expert panel, to better represent consumers:

• Australian Investors’ Association;
• CPA Australia and Institute of Chartered Accountants;
• a representative from one of the financial counselling associations;
• Choice (formerly Australian Consumers’ Association);
• one of the “seniors” associations;
• any other representative consumer group

3. Let’s ignore 30 per cent of the market: lack of SMSF trustee representation

See discussion under Problem 2.

4. Oops! We forgot about 50 per cent of the population (women)

If you don’t work continuously for 35 years, then the rationale behind the compulsory super system (you need to be working) and the reduced contributions caps for voluntary contributions (you need to save regularly throughout your working life) will mean that saving for your retirement will be a continual struggle. A major segment of the population affected by lengthy breaks from the workforce is … women. Hey, that’s discriminatory policy isn’t it?

How to fix it. Well, this may sound tokenistic, but come on guys, do you think that having a female on your expert panel may assist you to appreciate the issues of 50 per cent of the population that seem to be ignored. And perhaps we need to be more creative about the assumptions we make about the working lives of Australians. Perhaps my argument may be more compelling if I remind you that women are not the only Australians who have breaks from the workforce.

5. Do we really have to know about tax and retirement?

If you look closely at the industry associations who have the ears and hearts of government, they are predominantly focused on the accumulation phase of superannuation accounts. If the government, and the super industry want to know why SMSFs have become so popular, they simply have to ask the following questions: