Magazine of Socialist Action in Australia

Shady superannuation system exposed

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Workers retirement funds are being poorly managed and have gouged billions of dollars for fees and dodgy insurance according to a report from the Productivity Commission. A universal living-income pension for dignified retirement is desperately needed by workers as an alternative to the shady superannuation system.

Compulsory superannuation was part of the deal that drew union leaders into merely managing capitalism, and pushed workers to pay for their retirement from their own wages. It was set up by the Hawke-Keating Labor governments as part of their “Accord” policies. The “Accord” era put a cap on wages, but not profits, and successfully installed pro-capitalist politics in the trade unions.

The results for workers were disastrous. Profits are at historic highs while wages are at historic lows. We have now had decades of social spending cutbacks and strike action has been squashed. The bosses have been winning the class struggle ever since, aided and abetted by Labor.

“Industry” superannuation funds with 50% union appointed directors are not all innocent in the superannuation rort. But unsurprisingly the Productivity Commission report finds that the banks are by far the worst parasites when it comes to retirement funds. Most of the worst funds are all connected to the banks and major finance companies.

Poor management of funds was found to affect over 1.7 million workers, and a quarter of all accounts. Some 10 million accounts, one third of the total, are unintended duplicate ‘zombie’ accounts created when workers switched jobs. Those accounts have $2.5 billion creamed off them every year in fees for unusable insurance and “administration” charges.

The recommendations of the Productivity Commission are not a path to a reasonable and dignified retirement though. The commission is a neo-liberal government think tank who also recommended that penalty rates be slashed. Their research was ordered in the first place by the Liberal government, who are far more interested in looking after their big business mates than workers’ wages and living standards.

Drastically diminishing the limited voice of trade unions in superannuation, putting in place more capitalist technocrats, and giving the banks a better shot at getting their hands on the $2.6 trillion in the system is what the commission recommends. But for workers you can’t fix the problems of capitalism by adding more capitalism. The banking royal commission is already giving us a glimpse of just how rotten the whole financial system in Australia is.

It’s clear that the managers of capitalism are incapable of providing a fair and decent retirement system that properly recognises the valuable input of all workers in society. Superannuation reflects and entrenches the current inequalities, oppressions and distorted values of class society.

Despite the essential jobs women do, they are overwhelmingly much worse off than men when it comes to superannuation. Women are overrepresented in low paid and insecure work. Young workers with thieves for bosses often suffer years of lost payments. Workers who face redundancy, illness or injury struggle to recover financially and carry the wounds to the grave.

But all workers deserve a dignified retirement. After all, Karl Marx showed that all profits and wealth are produced by the collective labour of working people.

Socialists stand for a system that guarantees a dignity in retirement. We demand a universal pension. Articles in newspapers like the Financial Review have already showed that a universal pension would be cheaper, fairer and more efficient than the current retirement system, even on the basis of capitalism.

For workers with decades of their wages tied up in superannuation accounts, a socialist government could work out transitional arrangements so as not to penalise them. It is not the fault of today’s workers and retirees that governments required their take home wages be limited by sacrifices into superannuation accounts.

The first steps could involve drawing all of the super funds together into one public institution and refunding workers their forgone wages. The remaining funds accumulated through dividends, interest etc could be used to support the democratically decided plan of social development.

A socialist pension system would go further than the meagre payments currently on offer and would do away with today’s stingy means testing.

Boosted incomes would be complimented by a wider socialist program including an expansion of affordable homes, free healthcare and free public transport to ensure retired workers live the dignified lives they deserve.

All of this would be easily affordable on the basis of public ownership of the biggest companies and a democratically decided plan of investment and development. In other words, democratic socialism.

By Kirk Leonard


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