Superannuation: The big swindle kills the illusion of the golden nest-egg
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Recently the media reported on a superannuation study entitled, "Not So Super" by Per Capita, a social justice think-tank, whose survey showed that Super earns better for those on high incomes (mainly men) but not those on low to no incomes (mainly women). Under capitalism superannuation is the Hermes of Greek mythology - a sneaky trickster, stealing things from other gods and hiding them in mindboggling locations.
The Hawke Labor government in the early 1980s ushered in superannuation to provide a savings retirement scheme so workers could supposedly retire in dignity. It was intended to take the edge of wage demands as part of a "social wage" concession. It became Labor's signature policy that ALP politicians would triumphantly boast as their great innovation.
However, there is nothing to boast about superannuation for the working class, it has turned out to be a liability for them and only an innovation for finance capital. Financial sources in 2016 calculated that the average Super saved by men was between $290,000 and $300,000, and for women between $138,000 and $180,000, which is not enough to provide for a comfortable retirement.
A retired person would need from $400,000 to $550,000 in their Super and a couple from $600,000 to $1.2 million to live reasonably. By far the majority of workers have Super accounts far lower than these amounts as indicated by the Retire Ready Index; it detailed that 47% of the workforce, 5.1 million of Australian workers will not have enough funds in their Super for a secure retirement.
Women big superannuation losers
Superannuation for most women is even more precarious because of the sexist nature of Australia's capitalist society. The Per Capita survey found that women retire on 47 per cent lower sums than men. Just achieving the inadequate figure of $150 000 in Super, saw poor results: three out of 10 for women and six out of 10 for men reach this sum.
One in every two Australian women works part-time, compared to only one in every five men. And still more are employed away from the formal workforce where they don't receive superannuation. On average those who are employed full-time get 20 per cent less than men.
All up, it means women get 33 per cent less than men while in the workforce, and a lot less overall because they are often out of the workforce having children, caring for children or caring for relatives. The world of work has worsened so much that superannuation was a flawed project from the beginning, or as Per Capita puts it: "Superannuation was designed around a model of employment that is rapidly disappearing."
Around 2.8 million people were owed $5.6 billion, an underpayment of $2,025 a person each year, in unpaid Superannuation Guarantee Charge in 2013-14 reported the Australian Tax Office. The major offenders come from the construction, hospitality, manufacturing and mining industries.
The increase of casual, part-time and cash-in-hand employment has seen a surge of non-compliance of compulsory Super obligations by employers. Tony Sheldon, national secretary of the Transport Workers Union called such practice wage theft: “It’s not break and enter, … it is the plague of billions of dollars in wages and superannuation which employers take from the pay packets of their employees,” he said. “It is wage theft. And needs to be treated like any other form of theft by making it an offence, with jail sentences.”
The current severe anti-union industrial scene has led to the weakening of implementing enterprise agreements and compulsory superannuation. Governments and business have aggressively restricted unions' capacity to monitor and enforce correct wages, conditions and entitlements such as Super.
The Federal government has implemented a detrimental number of changes to Super: frozen the expected increase of the superannuation guarantee from 9% to 12%; altered the pension asset test that penalised 300,000 superannuated retirees who are now in a financially poorer position; the last budget imposed a cap of $1.6 million on the amount of super that can be transferred into retirement phase, making it that much harder for retirees to achieve a comfortable retirement.
The Coalition government obviously has a clear policy agenda of emasculating the Super retirement savings of the five million Australian workers. Another measure they have concocted to carry out this agenda is their intention to appoint an 'independent chair' and a third of board seats with 'independent directors' to industry not-for-profit Super funds to make them "accountable and transparent" - and open to pressure from Government appointees.
Retail super funds offer lousy deals
Industry super funds have accused the big bank operated retail super funds of underperforming by 1.9% per year for the last decade compared to theirs. They point out that the 10-year Australia Prudential Regulation Authority (Apra) performance data demonstrated that bank-owned retail super funds have not delivered above-median returns for 95% of their members over the previous 10 years.
Industry Super Australia stated: "Constant outperformance by industry super funds over bank-owned super funds reflects the differences between for-profit and not-for-profit business models, which over the last two decades have seen significantly different member outcomes.
“The fact is, running a super fund to profit a parent bank sits very uneasily with the interest of members and the social policy objectives of compulsory superannuation."
Not-for-profit super sector generated 96% ($42.9bn) of cumulative fund-level investment returns above the median over the last 10 years, whereas the for-profit retail sector accounted for 96% ($25.4bn) of value lost relative to the median. After this suspicious performance, the Coalition government is not contemplating an investigation of the bank-owned retail super funds nor their governance.
Tax evasion by the rich
Superannuation for the rich has become a means for tax evasion. People on high incomes have covetously moved much of their earnings into super. For example, the amount earned over a $180,000 is taxed at 49 cents in the dollar. This can be reduced by putting that portion into a super account where it will be taxed at 15%.
One of the biggest losses to the Federal Budget is the tax concessions for superannuation. It is losing around $30 billion a year through tax evasion schemes practiced by the wealthy.
Superannuation tax concessions are growing at 13% a year; however, the government is more concerned that the pension scheme is growing at 3% a year. The tax loss of super tax concessions to the government budget will be greater than the cost of the pension.
The poor receive no tax discounts and in fact are penalised whilst the rich are granted charitable concessions, and the government insanely forfeits huge sums of revenue.
Capitalism formerly relied on accumulated profits, wealthy shareholders and bank credit loans for its continual expansion. Now superannuation funds play a significant role in providing investment capital.
Per Capita reported that Australian Super is worth $2.3 trillion, which is more than Australia's annual GDP. It naively thought that the present superannuation system should be scrapped and a scheme that paid out according to need should replace it.
Subsequently Per Capita came to the conclusion it was too far gone because the finance industry lobbyists would line up against this. Their grasping, Hermes-like fingers have too strong a hold of the Super industry. Superannuation has become just one more scam in a litany of scandals that plague capitalism's pursuit of expanding accumulation.
The Labor Party in creating the superannuation system in fact the betrayed the working class and sacrificially handed up its earnings to capital for expropriation.
A decent social system - socialism - would provide a secure and comfortable retirement for all, something capitalism refuses to do.
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