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Scrap Superannuation


  • Murray, Cameron

    (The University of Sydney)


Economically, there can be only one retirement income system. This system allocates goods and services at the time they are needed to retirees who do not have alternative non-work income sources to sustain a socially acceptable level of welfare. Superannuation does not fulfil the requirements of a retirement income system. Instead, it is best thought of as a growth-sapping, resource-wasting, tax-advantaged asset purchase scheme for the wealthy, which may ultimately have little effect on reducing reliance on the age pension system. The age pension vastly outperforms superannuation as a retirement income system across three key areas: macroeconomic cost, macroeconomic efficiency, and fairness. Vested interests perpetuate economic myths to avoid scrutiny of the superannuation system, such as 1) that the age pension system is financially constrained, 2) that pre-funding via asset purchases increases the capacity of a retirement income system, and 3) that superannuation is a payment from employers rather than from wages. Scrapping the superannuation system would massively improve Australia’s economic performance, and thus the performance of our retirement income system, the age pension. This can be done by forcing employers to pay what is now superannuation directly into wage accounts and allowing all super fund holders to withdraw up to a maximum amount each year during a transition period, after which all super balances will receive no special tax treatment. The age pension system could also be enhanced in both size (payment rates, including rent assistance) and scope (reducing the age that people qualify from 67 to 60), vastly increasing the fairness and efficiency of Australia’s retirement income system and economy as a whole.

Suggested Citation

  • Murray, Cameron, 2020. "Scrap Superannuation," OSF Preprints 957kz, Center for Open Science.
  • Handle: RePEc:osf:osfxxx:957kz
    DOI: 10.31219/

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