Upholding our superannuation system

5 min read
5 min read

Today, the Government received a report on the future of retirement income policy and no doubt anti-retirement groups will use this as an opportunity to try once again to tear down our world class system.

The usual suspects will argue that there is no need for superannuation as all low income earners end up on the full Age Pension anyway, so it doesn’t reduce budget costs.

Of course, this isn’t true. Only 2 per cent of Australians remained in the lowest income bracket for the whole 16-year period between 2001 and 2016. In addition, compulsory superannuation takes pressure off future budgets, and the Age Pension is already being substantially reduced by $7 billion per year and growing.

We currently spend just under 3 per cent of GDP on the Age Pension – that is one third of the OECD average of 8.8 per cent for government expenditure on income support for the aged. Some European countries already have four times the level of Australian expenditure.

The reality is that life on the full Age Pension is hard – it is only 67 dollars per day after all, or precisely equivalent to the poverty line according to the Australian Council of Social Service (ACOSS) and UNSW analysis. No Australian sets out to retire to a life of poverty.

Without compulsory superannuation, around 50 per cent of couples and over 70 per cent of single people would have incomes in retirement no greater than a $1,000 a year in addition to the Age Pension.

Let’s put that in perspective. The unemployment benefit—JobSeeker—at its current rate, is around 18 per cent higher for a single person and around 57 per cent for a couple than the full Age Pension.

JobSeeker payments do not provide people with a life of comfort and certainly not luxury, and the Age Pension in retirement falls even further short of both.

The anti-retirement groups also argue that young people are better off having more money in their pocket now, as they claim that superannuation is simply swallowed up in fees.

There is no doubt younger people are doing it tough. As demonstrated by those under 35 who used the COVID-19 early release provisions for their superannuation. By 12 July, over 1.4 million persons aged under 35 will have received early release payments, with many of them having made two applications.

Most Australians haven’t had a real wage rise in years. However, the Superannuation Guarantee clearly isn’t the cause of this wage stagnation, as it hasn’t increased since 2014. Also, fees are capped for low balance superannuation accounts to prevent balance erosion and assist young people to grow their retirement benefits.

The other key argument by the anti-retirement brigade is that superannuation should be used to buy your own home, however people can already make voluntary contributions to superannuation that can be used to buy a home, and the newly established First Home Loan Deposit Scheme also supports new buyers. Lack of housing affordability is driven by factors including supply, income, interest rates, immigration, state taxes, planning and infrastructure. Using compulsory super for housing would only increase prices and put housing further out of reach.

We can, and should, aim for policies that enable people to have both a home and a decent retirement.

Despite the fact that we have a retirement system with one of the lowest costs to government in the world, no doubt the proposals to increase tax on superannuation will come out of the bottom drawer in coming months as the Government considers budget repair.

However, there is a significant risk that younger generations are not just burdened with debt but also increased pension, aged care and health costs. Incentives are needed to encourage Australians to save for retirements and to ensure that, unlike in many countries, we’re not mortgaging our kids’ futures.

While there is clearly an opportunity to reform the tax settings for superannuation, the focus should be on removing outdated thresholds under which no superannuation is paid (currently $450 per month), bringing the self-employed and gig economy workers into the system, and addressing the significant inequalities faced by women in retirement.

Australians are facing the biggest economic challenge since the Great Depression and it’s imperative that we take this opportunity to reset the entire tax system, so it’s fit for purpose for the next 40 years. Now is not the time to take the easy opportunity and introduce yet another retirement tax.

Let’s instead look more broadly at:

  • the mix of taxes – direct and indirect (including the GST)
  • inefficient taxes on housing, such as stamp duty, and taxation distortions that directly impact on housing prices, such as negative gearing on your fifth home for example
  • making sure that everyone pays their fair share of taxation – around 30 per cent of large companies currently don’t pay any income tax
  • the global on-line ‘revenue pie’ and introducing a turnover tax that targets online economic activity in Australia.

Superannuation has a key role in the COVID-19 economic recovery and lifting productivity by investing in innovation, technology, and infrastructure. Let superannuation get on with the heavy lifting and allow individuals to keep their money for their retirement.

Picture of By Glen McCrea

By Glen McCrea

deputy CEO and chief policy officer

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Carmen Beverley-Smith

Executive Director - Superannuation, Life & Private Health Insurance, APRA

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Carmen joined APRA in March 2023 and holds the role of Executive Director, Life and Private Health Insurance and Superannuation.  

She has had an esteemed career in financial services, spanning over 25 years. She has held diverse leadership roles at Westpac and Commonwealth Bank of Australia, including across risk, transformation and change, product and portfolio development, and sales and service. 

Prior to joining APRA, she held the role of General Manager, Risk Transformation Delivery Integration at Westpac. This involved leading the group-wide implementation of a suite of solutions to uplift risk management capability and develop data, analytics and reporting. 

Carmen leads with a values-driven approach and a particular interest in developing and mentoring talent. 

She holds a Bachelor of Commerce and Accounting, is a certified Chartered Accountant and a Graduate of the Australian Institute of Company Directors. 

Amy C. Edmondson

Novartis Professor of Leadership and Management, Harvard Business School

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Amy C. Edmondson is the Novartis Professor of Leadership and Management at the Harvard Business School, a chair established to support the study of human interactions that lead to the creation of successful enterprises that contribute to the betterment of society.

Edmondson has been recognized by the biannual Thinkers50 global ranking of management thinkers since 2011, and most recently was ranked #1 in 2021 and 2023; she also received that organization’s Breakthrough Idea Award in 2019, and Talent Award in 2017.  She studies teaming, psychological safety, and organisational learning, and her articles have been published in numerous academic and management outlets, including Administrative Science Quarterly, Academy of Management Journal, Harvard Business Review and California Management Review. Her 2019 book, The Fearless Organization: Creating Psychological Safety in the Workplace for Learning, Innovation and Growth (Wiley), has been translated into 15 languages. Her prior books – Teaming: How organizations learn, innovate and compete in the knowledge economy (Jossey-Bass, 2012), Teaming to Innovate (Jossey-Bass, 2013) and Extreme Teaming (Emerald, 2017) – explore teamwork in dynamic organisational environments. In Building the future: Big teaming for audacious innovation (Berrett-Koehler, 2016), she examines the challenges and opportunities of teaming across industries to build smart cities. 

Edmondson’s latest book, Right Kind of Wrong (Atria), builds on her prior work on psychological safety and teaming to provide a framework for thinking about, discussing, and practicing the science of failing well. First published in the US and the UK in September, 2023, the book is due to be translated into 24 additional languages, and was selected for the Financial Times and Schroders Best Business Book of the Year award.

Before her academic career, she was Director of Research at Pecos River Learning Centers, where she worked on transformational change in large companies. In the early 1980s, she worked as Chief Engineer for architect/inventor Buckminster Fuller, and her book A Fuller Explanation: The Synergetic Geometry of R. Buckminster Fuller (Birkauser Boston, 1987) clarifies Fuller’s mathematical contributions for a non-technical audience. Edmondson received her PhD in organisational behavior, AM in psychology, and AB in engineering and design from Harvard University.

 

Daniel Mulino MP

Assistant Treasurer and Minister for Financial Services

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Born in Brindisi, Italy, Daniel was a young child when he moved with his family to Australia. He grew up in Canberra and completed his first degrees – arts and law – at the ANU. He then completed a Master of Economics (University of Sydney) and a PhD in economics from Yale.

He lectured at Monash University, was an economic adviser in the Gillard government and was a Victorian MP from 2014 to 2018. As Parliamentary Secretary to the Treasurer of Victoria, Daniel helped deliver major infrastructure projects and developed innovative financing structures for community projects.

In 2018 he was preselected for the new federal seat of Fraser and became its first MP at the 2019 election, re-elected in 2022 and 2025. From 2022 to 2025, Daniel was chair of the House of Representatives’ Standing Economics Committee in which he chaired inquiries; economic dynamism, competition and business formation and insurers’ responses to 2022 major floods claims.

In 2025, he became the Assistant Treasurer and Minister for Financial Services.

In August 2022, Daniel published ‘Safety Net: The Future of Welfare in Australia’, which aims to explore the ways in which an insurance approach can improve the effectiveness of government service delivery.