Anthony Keane: Why our politicians’ stupid super battles should stop now

Fighting over a fraction of a per cent rise in compulsory superannuation contributions misses the big picture, writes Anthony Keane.

O pinion:It’s time to stop the silly games over Australia’s superannuation system, and take politics out of retirement savings.

All the political fighting over raising compulsory employer super guarantee payments from 9.5 per cent to 10 per cent from July – as previously legislated – smells of Liberal versus Labor arm wrestling rather than any thought for the people.

Some Libs argue raising the SG rate means employers will suffer financially from sending more cash into a system that pays billions of bucks in fees to union-backed industry super funds. Labor argues the Libs are trying to look after their business mates while trying rob hardworking Aussies of their future wealth.

Both are right to a degree, but both miss the point.

Any money added to your super is good. Every $1000 going into the account of a worker in their mid-30s will grow to more than $8000 at retirement, based on simple compound interest calculations over 30 years at 7 per cent annual growth (excluding inflation adjustments).

Don’t shrink the retirement savings of Australians who really need it.

That’s enough to give a retiree an extra $100 a week, on top of age pension payments, for well over a year.

This highlights the damage done in the past nine months by the Federal Government’s early release scheme in which more than three million Aussies withdrew about $40 billion from their super to help cope with COVID.

Many of these were younger super savers, and many wiped out their entire balances, which means they’ll have to start again and compound interest won’t get a chance to work the magic that delivers huge gains during years 30 to 40 of a working life.

Another argument we see in the current super wars is that the tax benefits of super outweigh the economic benefits.

If that’s the case, reduce some of the tax benefits for the wealthiest super savers, rather than punish those who really need every dollar.

It’s projected that majority of today’s workers will retire on some form of age pension, even decades from now, and research has found this is sustainable – with zero chance that the pension will be stopped completely.

Super will deliver a handy extra boost on top of modest age pension payments that currently provide up to $944 a fortnight.

Those who argue that super is pointless because lower-income workers will become pensioners anyway don’t consider how comfortable their own retirement would be living on about $470 a week with no personal nest egg as back-up.

Super also is becoming increasingly important in a world where our government is banning foreign investments – particularly from China – in major assets and infrastructure.

A nice slice of the $2.9 trillion of our money currently sitting in super can be used to help fund crucial infrastructure to help our nation grow. Aussies owning Aussie infrastructure – what a great idea.

Compulsory super is still legislated to rise to 12 per cent by 2025.

Putting politics aside, this should be allowed, for the good of the millions of Aussie workers who will otherwise have little else when they can finally stop and smell the roses.

@keanemoney

Originally published as Anthony Keane: Why our politicians’ stupid super battles should stop now