Superannuation: for better or worse?

Superannuation is less than super

We have come to the end of another annual round of changes to our super fund which, in Australia, started off as a world model for the superannuation system. Instead of creating a wordwide standard, this annual tampering has led to numerous amendments (most of which we were alerted to via media announcements). Some amendments were made to correct earlier legislation.

Although it is ‘your’ superannuation, originally designed to get you off the promised ‘government pension’, the money for this is simply not there. Why? Because the taxes you paid have since been pre-spent by our governments, mainly on their own over-generous super funds.

Public choice theory

So, what exactly is it that drives this annual frenzy of changes? Why not leave a reasonable system alone for a few years, so that it can meet the objective of giving us independence through our own financial responsibility?

There is a reason and it is explained in economic terms by public choice theory. The recipients of the concentrated benefits (money), being the accounting profession and financial advisers, work their butts off to generate constant change but the diffused costs are spread over the millions of people, such as ourselves, who are the owners of our superannuation policies.

Most of the latter group are too busy following the latest rule changes and paying the professionals to handle such matters for us, hence we are too busy to march in the streets and demand that they “leave our superannuation alone”. Sally Patten wrote about this well in the November 28, 2016 edition of the Australian Financial Review under the headline:

Thank you, Treasurer, for the super reforms

“On behalf of the financial planning and accounting communities, your correspondent would like to take this opportunity to thank Treasurer Scott Morrison for the most significant superannuation reform package in nearly a decade.

“Changes to the retirement savings rules, especially complicated, tectonic plate-shifting ones such as those which will be introduced on July 1 next year, help to justify the existence of a variety of occupations, including government relations and policy experts, lawyers, super fund administrators and a good number of staff at the Tax Office (not to mention financial journalists).

“But the biggest beneficiaries will surely be financial advisers and accountants, who will spend the next seven months demonstrating their expertise by explaining the changes to their clients and ensuring that they remain on the right side of the law.”