(For an expanded version of this article see also “The Superannuation Revolution”)
Australia owes a huge debt of gratitude to Paul Keating.
He established compulsory superannuation two decades ago despite a hostile Opposition that declared it to be a step towards socialism.
A few weeks ago, I chaired a Per Capita meeting in Sydney at which Keating reminded the capacity crowd that the original intention of his superannuation legislation was for everyone to accumulate as much Super as possible thereby ensuring that, in all of our retirement years, we could enjoy a lifestyle better than that which is the lot of someone on the age pension.
The plan was for every one of us to draw down all of our superannuation capital and income within our lifetime. It was never ever intended that anyone would leave their Super as a legacy to their family. That legacy, in reality, is a taxpayer funded bequest.
Now, an ever growing number of ageing citizens are on the verge of creating a situation that will place a major burden on young taxpayers if most of us old guys go onto the pension too quickly.
So, paying a part pension to people who have inadequate superannuation will become an extravagance that Australia can no longer afford. It will have to cease.
This means that a future government will reach a point where they will have no option but to pass legislation decreeing that none of us will be eligible to claim the age pension until we have used up all of the accumulated capital in our Super Fund through regular monthly payments that will eventually leave us with a nil balance.
The same legislation will certainly decree that none of us can ever draw our superannuation in a lump sum. We will probably be enabled to draw a monthly amount which is 50% better than the pension and finally go on the pension when we enjoy so long a life that our fund dies before we do.
In addition, legislation will be needed to cap the amount of Super that can be held in anyone’s fund. It will probably be set at a sum that will provide monthly drawings at five times the rate of the pension for 25 years from age 65 to 90.
The sooner we do this, the better it will be for our tax paying grandchildren – and for Australia.
Yours At Large
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