Superannuation: why bigger is best

Ah, the eternal inanity of the spotlessly empty mind. Step forward assistant treasurer Stephen Jones.

Assistant Treasurer and Financial Services Minister Stephen Jones. Picture: Blair Jackson

Ah, the eternal inanity of the spotlessly empty mind. Step forward assistant treasurer Stephen Jones.

Jones has ponderously, portentously and utterly fatuously informed us that the purpose of superannuation “was to provide for retirement income not to provide for inheritances”.

Thank you for that, we will now all breathlessly await your next fiscal encyclical. Perhaps some deep thoughts on the real purposes of income, that have so far eluded mere mortals? The belief – totally of course disconnected from reality – that underlies that sort of fatuous observation, is that the last dollar of someone’s superannuation should be spent on their funeral. That is to say, their superannuation balance will have run down to zero, neatly and nicely in lock-step with their life.

To start, there is the simple, utter impossibility of getting that exactly right. How do you know whether you will need your super to carry you through to 75, rather that 85 or 95? And, carry you through, in what sort of health and the possibility of heavy spending? Apart of course from “knowing” the economic and financial conditions that will prevail over 10, 20 or 30 or more years? Or is the assistant treasurer going to assume the responsibility of telling every single person the exact dates of their deaths?

And their health over the rest of their lives? And the returns they will make on their super, and the year-by-year inflation?

So they can plan ahead to run their super balances down to zero, neatly in sync with their expiring lifespans?

But even more – fiscally – important is that the exact opposite is or should be the case. The entire objective of our superannuation system should be precisely that people die with significant super balances.

That they should die with significant balances and not have cashed them in as early as the start of their retirement and moved straight to the age pension and all its supplementary, especially health card, benefits.

That they should die with significant balances and not have run them down to levels low enough to enable or to force them to move onto the age pension at some point in their retirement journey. The single biggest criticism of the Paul Keating-driven system is precisely the opposite of the Jones inanity: simply, that the overwhelming majority will never have sufficient balances in their super.

That all it is ever going to be is a taxpayer-subsided compulsory savings system while you are working; and an arguably even bigger multi-billion dollar a year compulsory free lunch for the managers of the $3.5tn in the system.

Indeed the combined efforts of both the previous Coalition government with its $1.6m balance cap and now this Labor government’s $3m cap – trust me: stupidity has always been entirely bipartisan – are designed to ensure everyone goes back on to the pension at some point. So the taxpayer hands out all the multibillion-dollar-a-year subsidies along the way while people are working. They then cash in their super – so no-one leaves a balance to an heir, keeping an idiot like Jones happy – and go on the pension. Not one taxpayer “own goal”, but two.

Originally published as Superannuation: why bigger is best