Is Super Still Appropriate?

Superannuation is a topic we’ve all heard a lot of, but have we been looking at it from the right angle?

Right now, millennials are being forced to save their hard-earned cash in superannuation accounts for a future that’s too far away and potentially very uncertain. By the time they’ll finally get to retirement age, they may never even see the benefits.

What if compulsory super was axed? Could we enjoy life a lot more with the extra money? Would we be able to make smarter investment decisions than those currently made for us by superannuation companies? And most importantly, why wait until we are too old to enjoy ourselves?

I believe we should give people the freedom to choose what they do with their money now.

A debt free society

Australia could be a debt free society if people were allowed to use super to pay off their debts and mortgages with money lenders. Over $2 trillion is currently held in superannuation funds in Australia. By comparison, household debt is nearly $1.7 trillion, over 90% of which is housing debt.

Wouldn’t it be easier to have a lesser burden of debt by having 9.5% additional funds to use? The average credit card interest is far greater than the yields from super we’re ever going to see. The average consumer needs a certain level of money to provide the lifestyle they want, and the cost of living is only getting higher!

Even if some restrictions remain, why can’t we use super to buy our own house and/or service our rent expenses? It makes no sense that we’re only allowed to use super for investment properties or to allocate to large super funds, and have to then borrow money to buy the place we actually live in.

Another issue is whether super is even being managed for the best return on investment. The majority of super goes into large funds which mainly invest in the stock market. If that crashes, you’ve lost everything. Self-managed super funds are beyond the reach of most people: they’re expensive and complicated to run.

Pictured: Market crash.

A tax on companies

Super is not only putting pressure on our existing cash constraints, it’s effectively another tax on companies. It’s driving up the cost of labour and making Australian businesses less competitive. Companies can’t afford to hire locally so they end up offshoring, which has a considerable impact on Australians jobs.

If we dropped the cost of labour by 9.5%, there would be a massive change to business economics. Businesses would be cash richer and could hire more people locally. A win-win scenario for both the Australian employment and business market.

The systemic issues that Super is intended to address are modelled on the behavioural patterns from previous generations, and may not be right for an entirely different generation.