The original intention of super is laudable. To give Australians a degree of financial independence in retirement. Autonomy from the government and dignity. 

In that respect, nothing has changed. Except for the quantum of money it has raised and continues to do every day. $3,500,000,000,000 as of March 2023.  

The trouble with big numbers is that they are incomprehensible and glossed over.  

To try and give you some context, it would take the wise and fiscally prudent Australian government 60 years to spend that much money.  

And the difficult thing about money is that it distorts reality. 

1. Superannuation is a vast sum of money consolidated in the hands of very few.  Unelected super funds, fund managers, and bureaucrats control where this money goes.  

Chasing returns. Money has an inexorable appetite – it wants more. And that relentless hunger distorts local markets, leading to excessive valuations and market volatility. 

2. Property development and construction are fuelled by superannuation money at both a corporate and an individual level.   

a. Many industry funds invest in large construction projects not just because of the returns, but also because it creates jobs. This is admirable but super has only one objective. If better returns can be achieved elsewhere, then employment opportunity is not a valid investment criterion. 

b. Many other corporate property developments are funded with superannuation money, creating an ever-increasing spiral of property prices. This is exacerbated as state and federal governments exit from public housing.  

For such a wealthy country, it is remarkable how many people are struggling with rising house prices. 

c. Individually property represents over 20% of the value of assets held in SMSFs. 

A further unintended consequence lies in the lifestyle opportunity cost of super. 

The superannuation payment is set to rise to 12% of a person’s salary or wage, by which time it will represent a significant proportion of people’s annual wage increase. Leaving them with less money here and now. 

The diminished in-hand income also reduces their capacity to borrow and repay debt, and increases the likelihood that people will still be repaying their mortgage as they approach retirement.  

Considering that in 2021, 35.9% of Australians aged 54-65 were still paying off their mortgage, it is likely this trend will deteriorate. 

The net effect is that they have been forced to trade off their quality of life now for a potentially happy retirement.

In effect, they are building a nest egg they can’t access until they are 60 (with very few exemptions) irrespective of their life circumstances, and could suffer financially in the interim.