Senator Bragg on the Coalition’s vision for advice and super

One response to “Senator Bragg on the Coalition’s vision for advice and super”

1. 

   Kym Bailey CTA GAICD

   November 5, 2024

   Insightful interview however, at the end, when it became personal, all the previous positioning came undone. Stating super shouldn’t be preserved ignores the primary motivation for the systems establishment – to take pressure off the federal budget in the longer-term by reducing reliance on the aged pension. By omission, the Senator seems to be suggesting that if a person has a home at retirement then income support will be as back in the Menzies era – via government transfer payments. So we go full circle, create private wealth via home ownership but continue to provide public income support. If this is a sound policy from a social cohesion perspective, then we need to start considering tax on the home. If not whilst the person is alive, on their death. The Menzies’s era can not be re-created. We have the biggest generation coming through and the simplicity of aiming for a home with government providing the income is not sustainable. The numbers are against that working and, coupled with the fact that, instead of people lasting a few years post retirement (receiving aged pension), lifespans are much longer. So we have the situation where the aged pension support is for longer as are the other government supports such as health care and aged care. Super was envisaged as giving some financial autonomy but (probably more importantly), relieving the federal budget. But back to Bragg’s thesis – he gets financial advice. He believes there are other ways to save outside of super. All good so far but any advisor will have a super strategy firmly in the mix due to the tax concessions and, more importantly, the well established principle of the effects of compounding. If you get a tax concessions to contribute to super, you get something today and the trade-off is that your contribution will continue to grow with earnings re-invested. Compounding isn’t just the preserve of super but, the preservation element means it has time to work. Bragg is only around 40 so his access to super is a long way off and maybe topping up super is limited for him but, the remuneration for a Senator means concessional contributions are maxed out. The point missed was that super is 30 years old and what was appropriate back in the 1980’s needs to be revisited for ongoing appropriateness. The constant tinkering is just patching potholes – a full blown review is needed. Super has its roots in industrial relations so there will always be difficulty in trying to change it but that shouldn’t mean we don’t try. Things such as payday super are a great initiative but almost a mountain too high to navigate. It should be used as a test case for all that is wrong in the system. Modern tech is yet to discover super and change is expensive etc. One point of agreement with Bragg is the default insurance in industry funds. It’s cheap as chips but so very limited. The older you get, and hence the higher likelihood of a claim, the lower you cover. The name Group Insurance is well placed. As Bragg said, concepts in an ideal world are great but, the super system and the industry built around it are far from perfect so some root and branch reform is needed.

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