{"id":615609,"date":"2026-09-05T20:22:22","date_gmt":"2026-09-05T20:22:22","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/615609\/"},"modified":"2026-09-05T20:22:22","modified_gmt":"2026-09-05T20:22:22","slug":"five-things-id-change-about-superannuation","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/615609\/","title":{"rendered":"Five things I\u2019d change about superannuation"},"content":{"rendered":"

The superannuation <\/a>regulator, APRA, released its latest figures this week. And they are, frankly, extraordinary.<\/p>\n

Australians now have almost $4.8 trillion in super.<\/p>\n

That’s trillion, with a ‘t’.<\/p>\n

The system received $236 billion in contributions over the past year, earned an investment return of 8.6% and paid out $148 billion in benefits.<\/p>\n

In a little over three decades, we have built one of the largest pools of retirement <\/a>savings in the world.<\/p>\n

That money is helping, and will help, millions of Australians enjoy a better retirement. It reduces the burden that would otherwise fall on future taxpayers. And it provides long-term investment capital for businesses, property, infrastructure and other assets.<\/p>\n

For all of its faults \u2013 and I’m about to list some of them \u2013 I think superannuation is one of the best economic policies of the last four decades.<\/p>\n

We are very fortunate to have it.<\/p>\n

But, of course, ‘excellent’ doesn’t mean ‘perfect’.<\/p>\n

When I posted some of those numbers on social media earlier this week, I said “For all its problems (and I’d fix many), we are very fortunate to have it.”.<\/p>\n

Some followers, very reasonably, asked me what I’d fix. Here’s my answer, in 5 points:<\/p>\n

\"Man<\/p>\n

Image source: Getty Images<\/p>\n

1. Keep super for retirement \u2013 and keep politics out of it<\/p>\n

Super is our money.<\/p>\n

But it is money we are compelled to save because, left entirely to our own devices, many of us wouldn’t put enough aside for retirement.<\/p>\n

That comes with obligations, though.<\/p>\n

We shouldn’t be able to raid our super whenever a politically popular idea comes along. That includes proposals to let people withdraw it to buy a home.<\/p>\n

Yes, helping first-home buyers with their deposits sounds attractive. I understand why people like the idea. But giving buyers more money without increasing the number of homes mostly gives them more money to bid against each other.<\/p>\n

Prices rise. Retirement balances fall. And the underlying housing shortage remains.<\/p>\n

Governments should also resist the temptation to influence where super is invested.<\/p>\n

There may be excellent opportunities in housing, infrastructure, energy or Australian businesses. If a fund independently decides an investment offers an attractive return for the risk involved, wonderful.<\/p>\n

But the decision must be made in the best interest of members’ retirements \u2013 not based on the whims of politicians. Super is compulsory retirement saving, not a political piggy bank.<\/p>\n

2. Radically simplify it<\/p>\n

Here’s a phrase I’ve used repeatedly: Super is stupidly complex.<\/p>\n

There are different contribution categories, caps, thresholds, tax <\/a>treatments, account types, preservation rules and withdrawal rules.<\/p>\n

And those are only the headlines.<\/p>\n

Some complexity is unavoidable. People have different circumstances, and a system covering millions of Australians will always need rules. But this\u2026 isn’t that.<\/p>\n

Funds spend members’ money administering the complexity. People pay accountants and advisers to understand it. And those with the most money can afford the most sophisticated help navigating it.<\/p>\n

Meanwhile, millions of ordinary Australians put super in the too-hard basket.<\/p>\n

We need fewer contribution categories, fewer thresholds and a much simpler retirement-account structure.<\/p>\n

Thresholds should be automatically indexed. Rules should be written in plain English. And governments should stop tinkering with the system every few years.<\/p>\n

You shouldn’t need an accountant and a lawyer to understand how to best manage your super \u2013 especially contributions and withdrawals.<\/p>\n

3. Break the fee gravy train<\/p>\n

Australians don’t get to choose whether to participate in super. We are compelled to put away 12% of our wages. I’m good with that.<\/p>\n

But it creates a guaranteed and constantly growing pool of money for fund managers, administrators, advisers, insurers, consultants and everyone else taking a clip of the ticket.<\/p>\n

Some provide valuable services. Others? Well, there are an awful lot of comfortable livelihoods being funded by compulsory contributions from Australian workers.<\/p>\n

Even apparently small fees matter when they are charged every year, on a growing balance, over four or five decades (and longer, in retirement). Those costs add up, as anyone who’s seen the ‘compare the pair’ ads knows.<\/p>\n

The solution? I’d create an extraordinarily low-fee default fund, run independently by the Future Fund.<\/p>\n

It would offer a small number of simple, diversified investment options, mostly ETFs<\/a>, including a low-cost growth option suitable as the default for most working Australians.<\/p>\n

That’s all most people would need.<\/p>\n

Those wanting a different fund, investment strategy, insurance arrangement or self-managed super fund<\/a> would remain free to choose one.<\/p>\n

But other funds would have to persuade Australians to leave a very good, very cheap default option. They would need to offer better service, genuinely superior performance or some other benefit \u2013 and justify the fees they charged.<\/p>\n

That competitive pressure would help everyone. Fees would have to fall, or value would have to rise.<\/p>\n

(And yes, there would need to be a very high wall between the government and the fund’s investment decisions.)<\/p>\n

4. Make sure super is used in retirement<\/p>\n

Super is supposed to provide retirement income.<\/p>\n

It shouldn’t be functioning as a tax-minimisation or an estate-planning vehicle.<\/p>\n

That doesn’t mean retirees should be forced to spend their savings quickly, or sell their growth investments on the day they stop working.<\/p>\n

Someone retiring at 65 might live for another 25, 30 or even 40 years. Their money needs to keep working.<\/p>\n

Retirement day isn’t the end of the investing journey. For many people, it’s not even close.<\/p>\n

But there should be a reasonable expectation that super is progressively used to support someone’s retirement.<\/p>\n

We already have minimum-withdrawal rules for pension accounts. I would apply that broad principle more consistently to money left inside super after retirement.<\/p>\n

Withdrawals should be sensible and age-based, recognising that people need flexibility, don’t know how long they will live and may face significant health or aged-care costs.<\/p>\n

People could still save or invest the money outside super. They could still leave an inheritance.<\/p>\n

But super itself should fund retirement, rather than providing an indefinite tax shelter for the next generation.<\/p>\n

5. Make the tax concessions fairer<\/p>\n

Super should remain concessionally taxed. That is part of the bargain.<\/p>\n

We lock the money away for decades, use it for retirement and receive favourable tax treatment in return.<\/p>\n

But favourable doesn’t have to mean overly generous, or unlimited.<\/p>\n

I would give retirees a substantially higher tax-free income threshold than working Australians. Probably a universal aged pension, too. Above that threshold, retirement income would be taxed at normal marginal rates.<\/p>\n

Most retirees would still pay little or no tax. Those receiving very large retirement incomes would make a reasonable contribution.<\/p>\n

There is also no convincing policy justification for holding tens or hundreds of millions of dollars in concessionally taxed super.<\/p>\n

At some point, the system stops encouraging retirement saving and starts subsidising wealth accumulation.<\/p>\n

Of course, any thresholds should be indexed, so inflation doesn’t gradually capture people the policy was never intended to affect.<\/p>\n

Lastly, tax should apply to actual income and realised gains \u2013 not increases in the paper value of assets that haven’t been sold.<\/p>\n

And for the record\u2026 any reform should replace complexity, not add another layer to it.<\/p>\n

None of these changes would weaken or destroy Australia’s superannuation system. That’s the last thing I want.<\/p>\n

In sum\u2026<\/p>\n

If Australians are compelled to save part of their income, governments should protect that money, keep politics out of its investment and make the rules understandable.<\/p>\n

Everyone should have access to an extraordinarily low-cost default, while retaining the freedom to choose something else.<\/p>\n

Super should be used to support retirement. And its tax concessions should remain generous without becoming unlimited.<\/p>\n

Seems pretty reasonable to me. Oh sure, those who’d be negatively affected will complain, but that’s just human nature. Policy improvements need to use a broader lens.<\/p>\n

Almost $4.8 trillion is an extraordinary achievement. The system that governs it should be improved. <\/p>\n

Fool on! <\/p>\n","protected":false},"excerpt":{"rendered":"The superannuation regulator, APRA, released its latest figures this week. And they are, frankly, extraordinary. Australians now have…\n","protected":false},"author":2,"featured_media":615610,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[72,3472,176,61,60,174,175],"class_list":["post-615609","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-editors-choice","tag-finance","tag-ie","tag-ireland","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/615609","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=615609"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/615609\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/615610"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=615609"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=615609"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=615609"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}