Superannuation wars sparked: why we beat the French at retirement

Super changes are again causing controversy, but here’s why you won’t see us following the French and their angry protests.

The French are protesting about raising their pension age. Picture: Alain Jocard/AFP

Protesters in Paris have been taking to the streets lately to complain about something that would leave many Australians shaking their heads in disbelief.

The French are furious that their government plans to lift their retirement pension age – from 62 to 64.

Meanwhile, Australia’s pension age will rise to 67 in a few months, giving us one of the oldest retirement ages on the planet alongside Denmark, Greece, Iceland, Israel and Italy.

Ageing populations with longer lifespans have put pressure on governments to increase pension ages in the past decade, although there are still more than a dozen nations with official retirement ages of 60 or less, including China, India, Vietnam, Indonesia, South Africa and Ukraine.

While the French are passionate about protesting, Aussies appear laid back about retirement – there was barely a rumble when in 2009 Labor unveiled plans to increase our pension age from 65 to 67 by July 2023.

One of the key reasons the French are fuming is that very few of them have personal pensions linked to investments – like our superannuation is, and instead they have complex state pension schemes.

Australia continually ranks among the world’s 10 best retirement savings systems, and combined we own 23 million super accounts holding $3.3 trillion.

French protesters with a sign reading “64 years old, it’s no”. Picture: Loic Venance/AFP

The average super balance of an Australian man aged in his early 60s now is $358,000, while for a woman it’s $288,000. Those averages are skewed higher by tens of thousands of Aussies with several million dollars each in their super funds, so a more accurate reading is the median super fund balance – the midpoint of all members – of $181,000 for men and $139,000 for women.

For many seniors, super delivers a handy income boost above the age pension, which currently pays a single $26,689 a year and a couple combined $40,238.

Superannuation reduces reliance on the welfare system and makes age pensions affordable for the government for the rest of this century at least, but super’s sheer size has made it a target of constant government tinkering.

A fresh super war erupted last week as Treasurer Jim Chalmers flagged changes, including hinting at a $3 million cap per person, to grab more tax from those it argues can afford it. He was immediately accused of breaking election promises not to touch super.

Meanwhile, opposition treasury spokesman Angus Taylor was renewing calls for people to be able to withdraw their super and put it towards their home.

Didn’t the Liberals learn from their Covid early-release scheme, when many lower-income people withdraw $20,000 from their super only to spend much of it at JB Hi-Fi, that constantly unlocking superannuation will leave Australians more like those angry French protesters without private savings?

Past government measures designed to put more cash in first home buyers’ pockets have often had the unwelcome effect of pushing up house prices further. Plus the average super balance of Australians in their mid-to-late twenties is about $23,000 – not much of a deposit.

If $20,000 is withdrawn from super, it loses the opportunity to grow to $325,000 over 40 years through the magic of compounding interest at 7 per cent annually.

Super has been a great success because it is locked away and Australians know where they stand.

If politicians treat it as a battleground, savers will be left shell-shocked and scared to use the nation’s number one financial tool for enjoying a comfortable retirement.

Originally published as Superannuation wars sparked: why we beat the French at retirement