Australia’s compulsory savings regime has been praised and criticised over the past three decades. With trillions of dollars in assets under management, is superannuation there to maximise workers’ retirement savings, reduce the burden on the pension system or serve another broader economic and social purpose? A recent report found one in four Australians missed out on legal super entitlements in a single financial year and research finds tax concessions disproportionately benefit men and high-income earners, which might be why surveys show many Australians find the system unfair. But should we abolish superannuation?
Arguing in the affirmative in today’s Friday Fight is writer Robert Lechte and arguing in the negative is accounting lecturer and superannuation expert Natalie Peng.
Let’s face it — superannuation might not be sexy, but neither is living off canned beans when you’re 75. You might not love checking your balance now, but future you will thank current you when you’re not scrambling for a safety net in old age.
There’s been chatter lately about scrapping super altogether — perhaps because no one enjoys watching their pay disappear into a mystery account they can’t touch for decades. But hold on. Do you trust yourself to save 11.5% of your salary every year until retirement? If your answer is “of course,” congratulations! You’re in the minority. Most of us need a little (okay, a lot) of help, and that’s where compulsory super comes in.
The alternatives? Pretty grim
Before we fantasise about ditching super, let’s look at the alternatives. Without compulsory contributions, you’d be left to manage your retirement savings on your own. Sound good? Not when you realise that Australia has one of the highest personal debt levels in the world. And with rising living costs — housing, childcare, healthcare — it’s hard enough to make it to the end of the month, let alone put away a significant chunk of your salary for the future.
In countries without compulsory retirement savings schemes, like the United States, the struggle to save is evident. More than half of working Americans have no retirement savings. Do we really want to have that kind of insecurity in old age?
We can’t rely on the age pension as a fallback either. Sure, it’s there, but let’s be real — pensions were designed in an era where people didn’t live as long, and healthcare costs weren’t sky-high. As life expectancy rises, so do the years we’ll spend in retirement. Without a strong super system, the age pension would buckle under the weight of an ageing population, leaving future retirees in a precarious position.
Super is a social safety net (yes, really)
Think of super as a social contract between generations. Right now, superannuation is shouldering the load for millions of Australians, reducing the strain on public welfare systems. If we scrap it, future taxpayers — today’s younger workers — will be left to foot the bill. Millennials and gen Z, already facing housing affordability issues and student debt, would be hit with higher taxes to support retirees. That’s hardly a fair legacy.
Now, I know some critics claim super is just a playground for the wealthy, letting high-income earners stash away tax-free fortunes. While there’s truth in that, abolishing super would only widen inequality. Wealthy people will always find ways to save for retirement — super or no super. It’s the middle- and lower-income earners who rely on it to ensure they don’t retire into poverty.
The real problem is super inequality
Super isn’t perfect, and inequality is one of its biggest flaws. Women retire with far less super than men due to the gender pay gap, time out of the workforce for caregiving, and part-time work.
But scrapping super won’t fix this. In fact, it would make things worse. What we need is a fairer system that accounts for the realities of caregiving and lower-paid industries. Reforms like increasing the superannuation guarantee, contributing during parental leave, and offering better tax incentives for low-income earners would help level the playing field.
Super is like any system — it’s not perfect, but with the right tweaks, it can work for more people, not just the wealthy.
Super fuels the economy
Superannuation funds aren’t just sitting in a vault somewhere — they’re driving the Australian economy. With over $3.5 trillion in assets, these funds are invested in infrastructure, property, and businesses that support Australia’s long-term needs. Dismantling super would take away a major source of capital, stalling economic growth and vital national projects.
In addition, big super funds play a crucial role in corporate governance. Through proxy voting, they shape the strategies of major companies, ensuring accountability and promoting sustainable practices. Everyday Australians, through their super, benefit from this influence, as companies are held to higher ethical standards.
The myth of freedom over your money
Some argue we should have the freedom to do whatever we want with our money. But freedom comes with a price. If we allow people to withdraw their super early or remove it altogether, many would find themselves short in retirement due to the behavioural bias of short-term thinking and under-diversification.
People tend to panic during market downturns, often selling at the worst possible time. This behaviour leaves individuals vulnerable to poor returns, limited asset diversity, and insufficient retirement funds. Super makes saving automatic, protecting us from our worst instincts: spending now, regretting later.
The verdict: don’t scrap It, fix it
Super isn’t perfect, but it’s far from broken. Instead of tearing it down, we should focus on making it fairer and more transparent.
DING! DING! DING! CRIKEY EDITORS DECLARE PENG HAS PASSED HER ALLOCATED WORD COUNT
Abolishing it would throw millions into uncertainty and risk deepening social inequality. Let’s keep super, and improve it — for everyone’s future.
Read the opposing argument by Robert Lechte.
