Compulsory superannuation is a dud product for the lowly paid

I’ve been saying this for some time: compulsory super is a dud product for low-­income earners.

They are forced to forgo current consumption, pay higher taxation than they would otherwise pay and are only marginally better off when they retire on the full Age Pension.

For young casual workers, in particular, it makes no sense to have a portion of their small weekly pay cheques deposited into a superannuation fund — or more than one, if they have more than one job and there is no choice — only to have it eaten up by fees, charges and unwanted insurance.

By letting low-income ­earners opt out of superannuation, their weekly pay packets would be boosted along with their immediate standard of living.

Of course, not all low-pay workers stay low paid forever and these workers are the most likely to want to retain their attachment to superannuation.

They may also value the competitively priced insurance available through superannuation.

But that’s the great thing about choice: these people can stick with superannuation.

But let’s not get sucked in by all that piffle pedalled by the super­annuation funds about the joy of compounding. It works on the both the upside and downside. And when such a high proportion of the super contributions of low-paid workers is gobbled up by exorbitant fees and charges the funds might be best advised to stay mum on this topic.

The real fear of the superannuation industry is the precedent that would be set if one group of workers was set free. Why not permit others to opt out?

It is about time we questioned the real basis of compulsory superannuation. If the overall ­reliance on the Age Pension is ­expected to fall only slightly, what’s the point?

And, let’s face it, many people prefer a bird in the hand rather than two in the bush, particularly given the clear ­regulatory risk ­attached to superannuation.