31 Oct 2012
Despite Australia’s superannuation arrangements winning plaudits from around the world, Alan Kohler for one is not convinced. In this article for Business Spectator, Kohler is highly critical of our retirement industry which he claims is poorly regulated and open to abuse. He likens superannuation to a utility, given the government mandated compulsion for us to contribute to a defined contributions scheme where we bear the all the risks.
While long on criticism, Kohler is short on solutions. Would he really prefer the government to be in control of the decisions for our $1 trillion plus superannuation funds? While individuals can and do make poor investment decisions, would the government do any better? Their track record to date in most of their other endeavours is not compelling. Individuals are in control of their own health, and while many do it poorly, it is still preferable to having the government mandate what we eat and how much exercise we get.
The government’s role should be confined to setting up the framework for the country’s superannuation arrangements, taking full regard of the Intergenerational Report which highlights the problems inherent in an aging population. After that, its up to us to take responsibility for our own financial future. By all means improve financial literacy throughout the population but handing our retirement savings back to the government to invest on our behalf? We would prefer not!