The purpose of superannuation is to save paying the pension; however, this is misguided.
First, even if Superannuation was purely a ‘transfer’ – i.e. from one citizen to another without any management or structural inefficiencies – the tax deductions are so huge that they are comparable (and, in some studies, even surpass) the pensions ‘saved’.
Second, Superannuation is inefficient – i.e. the tax-deductions increase with the amount of Super saved, which means they are disproportionately channelled to the wealthiest. Put another way, Superannuation is GST-eclipsing regressive. Accordingly, while the forced savings may be construed as beneficial, overall, it takes government budget resources away from their optimal use without sufficiently compensating efficiency-gains such that the government budget and the nation are worse-off.
Third, the pension should be paid ‘universally, unconditionally and guaranteed’ as per The USI plus with a slight, akin to the ‘disabled top-up’, ‘aged top-up’.
Nevertheless, Super has bipartisan support because regarding:
- Labor, they introduced it, trade-union executives disproportionately benefit from the management of Super funds and its introducer (Paul Keating) is a formidable advocate who continues advocating for it
- Liberal, their wealthy constituents benefit most.
[Updated July 28, 2022]