A leading independent economist argues that superannuation should be abolished and funds in the accounts should be returned directly to Australians to manage themselves.
Fresh Economic Thinking chief economist Cameron Murray said mandatory retirement costs between $30 billion and $40 billion a year in administrative costs and fees.
“It has become quite a business and there are reasons of 30 or 40 billion dollars a year to keep the show going.
He said there was little scrutiny over how super funds spent members’ money.
“There are a lot of middle management positions, with titles like ‘director of modernization’ or whatever the current trend is,” Mr Murray said.
Murray expressed disdain for fund managers.
“I call them spreadsheet monkeys,” he said.
‘You have a small team and you sit there and bore your colleagues and get some nice PowerPoints to reassure everyone that the background is being nice. It’s ridiculous.’
Economist Cameron Murray said mandatory retirement costs between $30 billion and $40 billion a year in administrative costs and fees.
“They think they’re trendy people, buying and selling the same stocks with each other, back and forth.
‘We’re spending 30 or 40 billion dollars on those guys. It’s pretty wild.’
Mandatory superannuation, a system that requires employers to contribute 11.5% of an employee’s salary to a retirement savings and investment fund, was introduced in 1992 by the Keating Labor government.
Murray pointed out the contradiction in the stance of the left-wing party, which advocates privatizing retirement by encouraging people to entrust their money to private fund managers.
“It’s a really ugly sign for the Labor Party – they have a two-sided view here,” Mr Murray said.
‘When it suits them for the bottom line, they say: “we earn for you, we get more from the nasty employers, super is something extra.”
Murray argued that most saving occurs outside of super and that people will not be left destitute in retirement.
“While the treasury and policy nerds say this is nothing more than diverting salaries from bank account A to bank account B, where a fund manager can do whatever he wants with them until the taxpayer is 60 or how old he is.”
Murray said the Labor Party had “brainwashed people for decades” into believing super was something extra and not something taken out of a pay packet.
“When Super started, one of the big motivations Paul Keating had was to defer spending,” Mr Murray said.
‘So the deal with the unions was ‘you can get a pay rise’, but you can’t spend it in the economy because that would be inflationary.
‘So, it’s a pay rise that you receive in your bank account and that you can’t spend.
‘We have this idea that greatly stimulates investment. “It means suppressing spending and suppressing economic growth because we had fears of inflation.”
Murray noted that people were allowed to access their super to stimulate the economy during the pandemic period.
Murray argued that if the money tied up in Super was put back into general circulation, it would grow the economy and allow him to afford a much better and more affordable retirement pension.
Mandatory retirement was introduced in 1992 under the Labor government of Paul Keating (pictured right with his wife Annita Keating)
According to Murray, the abolition of super would not mean a nation of impoverished retirees, even without pensions being strengthened.
‘People can save voluntarily; They will still have their money,’ he said.
‘Something like 75 or 85 per cent of the money saved had already been saved outside of super.
Mr Murray approved the Coalition’s proposal to allow people to withdraw up to $50,000 from their superannuation (up to a maximum of 40 per cent of their balance) to buy their first home.
“A home is the best asset you can have in retirement,” said Mr. Murray.
‘In Singapore, with its mandatory savings system, your first goal is to own a house.
“In Australia, you’re not allowed to use super to buy property for yourself when you’re young and need a house, but you can buy property for someone else with a self-directed fund.”
Murray said a particular inequality was the different ages at which people could access social security and the old-age pension.
“It seems ridiculous to me that you can have your pension at 60 and your pension at 67,” he said.
‘There are rich people who have seven years to spend their tax-advantaged savings before they can claim the government pension.
It’s a total rip-off of the boomer middle class. You should be at least the same age.
Murray suggested super could be abolished by simply allowing people to access their funds.
However, he considered that this should be a gradual withdrawal.
“You can’t let everyone spend all the money at once,” he said.
‘There would be a huge spending spree because everyone under 30 would spend an extra $50,000 this year.
“You need to have an annual spending limit to empty the accounts over a period of four to five years for people who want to empty them.”
He also said random checks could be carried out to ensure companies pay salaries with the super added.