Unfair, inefficient and expensive: what went wrong with Australia's superannuation system

18 Feb 2013

“WILL you still need me, will you still feed me, when I’m sixty-four?” It’s a good question, particularly if you are now around twenty-four, which was Paul McCartney’s age when his song was released on the Beatles’s Sgt. Pepper’s album in 1967.

Decades earlier, in 1909, Australia had become one of the first countries in the world to introduce an age pension. Only half the population lived long enough to reach the qualifying age of sixty-five, and those who made it that far could expect, on average, to keep going to seventy-six if they were male and seventy-eight if they were female. Even then, a tough means test saw fewer than one in three actually receive a pension.

Today, almost 90 per cent of Australians make it to sixty-five, and men can then expect to live on to eighty-four and women to eighty-seven, according to government figures. Almost eight in ten of them get a full or part pension, and most receive extra income from superannuation, subsidised by tax concessions while the funds are accumulating and tax-free when they’re paid out. So they’re okay, Jack – while it lasts…

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