As we go about our working lives, many of us are too busy and distracted to pay much
attention to our superannuation.
If they're not in a good performing fund, then they can be condemned to a poorer retirement.
Compulsory super has turned us into a nation of serious savers, collectively investing
$2.7 trillion.
The money is pouring into superannuation. It's pouring in.
That's more than enough to buy all the companies on the Australian stock exchange.
The question of whether people are getting value for the money that's been pouring in
is now on the table and you can see that probably over a couple of decades now they haven't
been getting value, or the value they should have.
This is quite serious in Australia where we have compulsory superannuation which is itself
a very complicated structure and involves interacting with risky asset markets and a
lot of things that people otherwise wouldn't be thinking about or taking on.
I never really considered life beyond work. I mean, it was always an illusionary sort
of ideal that you hoped would occur one day but I didn't give it serious consideration.
I didn't give retirement serious consideration.
Tai chi helped 69-year-old retiree, Peter Bastick, deal with the stress of work and
now of retirement.
He started paying superannuation about halfway through his working life as a newspaper journalist
and editor.
Certainly equilibrium is something that is very heavily tested.
Superannuation just wasn't on my horizon and for that I'm personally negligent because
I'm now living with the consequences of not having a larger nest egg.
(Nice to meet you.)
Like many Australians, Peter has always found superannuation confusing and it's a pressing
issue now that his health is failing.
Accountant, Jennie Lynn has come over to help him make sense of it.
Most people would pull all their super out and pay off their mortgage and then live on
the aged pension.
Well, I still have an outstanding mortgage which would well and truly eat up not only
that but also my other assets.
Yes, that's the letter there.
Peter's old paper work reveals that when he changed super accounts he was asked to pay
a one-off advisor fee of more than $2,500.
That makes me irate that that's happened.
Well, I have no recollection of meeting an advisor, financial advisor.
And there's no names of any advisor on any of these forms.
It seems like a huge slug to me.
Peter's situation is quite typical in that he worked through a period where he wasn't
earning superannuation and then went into employers, several employers that paid superannuation
but he was never interested in his superannuation. It always just happened.
The problem in superannuation is this - for most people they don't choose to go in to
it. The money is taken out of their wage by law.
They know they can't get hold of it for 20 or 30 or 40 years. They don't feel as if it's
theirs. They don't feel as if they own it.
The government concentrated on getting money into superannuation by law but didn't show
much interest in what happened to it.
Basically it said now it's someone else's responsibility.
A plan that's either a multibillion-dollar blunder or one of the most far-sighted and
progressive policies in our nation's history.
It's a relatively small, affordable, manageable cost which will give Australian workers a
decent standard of living in retirement and build a pool of national savings.
There are going to be literally billions of dollars spewing forth from superannuation
companies every year.
The foundation of Australia's compulsory super system was the accord struck between the Hawke-Keating
government and the union movement in the 1980s.
Like many other significant social reforms of the '80s and the '90s, that grand compact
between government employers and the union movement delivered and created the superannuation
system.
Workers gave up a demand for a 3 per cent pay rise and put that money into superannuation
instead.
For an adequate and mature level of contribution to be established, I suggest that by the year
2000 we reach a national benchmark where each and every employee has a contribution to superannuation
equal to 12 per cent of wage and salary income paid into his or her superannuation account.
Despite determined opposition, compulsory super began in 1992.
I ask the Prime Minister why won't you have the decency to admit that your superannuation
levy means that workers will either have to take a pay cut or lose their job?
Keating's plan to increase compulsory contributions never eventuated.
The Howard-Costello government later scrapped Labor's deal to deliver tax cuts not as cash,
but as increased super.
Paul Keating would say you're partly responsible because he ...
He blames a lot of people for a lot of things and you know what we did? We just left in
place the schedule that had been announced.
I think it capped out at 9 (per cent) but that, by stopping that process, that incremental
increase that was meant to occur, it's meant that we've had this unfinished business sitting
there with our superannuation system since and that, I think, was a fundamental error
of that government and an error that we're still paying for today.
Employers currently contribute 9.5 per cent of workers' wages to super and the rate's
not legislated to reach 12 per cent before 2025.
If it were the case that people actually wanted to become entirely independent of the aged
pension for example, they would probably need to start contributing to super at a rate of
about 18 per cent at the beginning of their working life and contribute at that rate all
the way through their working life.
Most of us are, I think, probably realistically not prepared to do that.
If you truly want to become independent of the government, a self-funded retiree, live
off superannuation, you're going to have to put your own money in.
The occupational superannuation is not going to do it.
42 per cent of Australian retirees still receive the full aged pension.
Since 1997, the proportion of Australians receiving full or partial aged pensions has
fallen from 79 (per cent) to 70 per cent.
I really thought that I would just keep working and then just one day I would just die but
it sort of didn't work out like that.
I didn't expect to be 81 now and still be alive and still needing things, still enjoying
shopping, everything like that where you need money.
In her 80s, Robin Dougherty lives in Sydney entirely on the aged pension.
Like many women who took time out of the work force to raise children, she retired with
very little super and doesn't own her own home.
The system, I think, has failed working women and one of the big flaws in the system was
not recognising that inequity in the original design of the system.
Retirement was something I didn't even really think about. I'd only been in superannuation
for 16 years and I didn't see it, we were never shown anything to tell us that this
was really for our future, to keep us going when we retired.
So that's just what happened.
Robin's husband died young, and so when she retired from her job in hospital administration,
she moved to Bali to live with her daughter.
Her aged pension was enough to live comfortably there until her deteriorating health brought
her back to Australia.
I didn't realise I was homeless actually. In my source of looking for somewhere to live,
I met a woman from Uniting Care, that's how I got on to them and I told them my story
and she said you're homeless and I said, "No, no, I'm not homeless. I have a good bed every
night, I have got children that look after me, I'm fed well. I'm not homeless."
She said, "Yes, you are."
Public housing in Sydney's inner west now keeps a roof over Robin's head.
How is your experience different to those you know that were better prepared?
I think they're going on more cruises than I'm going on.
I have friends who I've known for years and who did well and they had help over the years.
But I enjoyed my life before I got old.
So I'm not at all envious of them, maybe sometimes.
Compulsory superannuation has been phenomenally successful at forcing most Australians to
save.
But how that money is invested and the costs that incurs can have a dramatic impact on
your retirement income.
At the moment we have a very unique system, a very large system, but it's probably the
worst retirement savings system in the world except for all the others and so the system
actually does need a lot of refining. It's not perfect and it's got a long way to go.