While I have been essentially self employed for most of my working life there are occasions that it has been easier for clients to be 'put on the books' rather than have it go through the business the normal way.

I'm admittedly pretty blasé about super fund paperwork particularly for something that usually only involves a few weeks of the year. But over the last few years I have manage to accrue 6 Superfund accounts.

Today I finally got a chance to sit down and open all correspondence, and was mildly surprised to find only one had any money in it. When I looked a little more closely the reason was not the one I had assumed (that management fees had gobbled them up), rather they had all defaulted to a death insurance scheme.

As both my wife and I are self employed we are relying on investments to fund our retirement so the couple of thousand dollars involved is not a great impost but I would wager there are many Australians who are moving from various forms of casual employment who are being stitched up by this rort. I have seen some estimates that 60% of employees accept the fund of the employer and do not opt out of these deductions.

The privatisation of our pension scheme has opened what should have been a good idea to the vultures. Here is an insiders take on it;

http://www.crikey.com.au/2013/01/09/super-rat-spills-on-industry-scams-gouging-and-dirty-little-secrets/

I know Hockey was going to address some of the rorts but they were pretty soft reforms. If a political party wants my vote the next election they need to detail how they ore going to rescue superannuation from the parasites.

If you went to a supermarket and later found that your shopping basket contained items that you haven't taken, for which you were also charged without your knowledge, then surely you should be able to demand your money back, plus interest and compensation for having to carry those items you didn't want.

And if it was done intentionally, then the perpetrators should also go to jail for stealing as well as for trespassing and dumping their junk in your basket.

Same if somebody wrote you, "We have your visa-card details because you bought some apples from us last month, so unless you tell us otherwise by next week, we'll deliver a box of condoms to your door".

Outright criminal.

Superannuation should be abolished anyway and the money returned to the owners to invest themselves as they please.

Dear Yuyutsu,

The argument was that we had to privatise our pensions because governments supposedly couldn't be trusted with our money, because changing demographics were supposedly going to place an unbearable strain on our pension system, and so that 'ordinary Australians' supposedly had a chance to access the types of wealth generation that were reserved for the rich.

Much of it is a fallacy.

The recent Murray Inquiry into the financial sector did not address this however it did recommend that members retain their original choice of fund for each job unless they choose another which would go some way to mitigating the problem. It will be interesting to see if the government takes them up.
http://fsi.gov.au/files/2014/12/06_Superannuation-1_enlarge.gif

However there also needs to be a law against defaulting to an insurance product.

The finance sector in this country outstrips mining and agriculture both in size and its contribution to our GDP. The problem is most of the income is not productive rather it is being accrued through skimming our economy. It is parasitic and needs to be reined in.

Steel, being self employed as you are, I am opposed to the fact that I have to deposit workers super to the fund of their choice. It simp,y adds to the unpaid work we do.

What should happen, in my view, is that all suoer should be paid into a government managed default fund, then the employee (contributor) logs in and deposits their suoer wherever they choose, provided it is within the guidelines.

At least then there would be no such thing as lost suoer, which is currently in the hundreds of millions I believe.

Dear SteeleRedux,

It's true that governments cannot be trusted with our money, but commercial entities can be trusted even less. Neither is immune from greed.

I believe that for someone else to purchase something with your money without your consent is already unlawful, so what you need is not new laws but a good lawyer.

I think that the changes proposed by the Murray Inquiry are cosmetic and too little. Compulsory superannuation itself was immoral to begin with and ought to be scrapped.

Regarding the finance sector, sigh, it's bad but I can't see a fix that wouldn't badly hurt many innocent ordinary Australians.

We as a nation are grossly underinsured, ASIC says that only 26% of adults have adequate insurance and the average is only $80000 (considering the average mortgage is $400k plus, at least something is paid and you are less of a burden on the government.)
to all those who cant be bothered looking at their statements and how cheap insurance is and then complain about doing nothing for years. You, Yoshi would probably be the first person knocking on the insurance companies door if your partner died/disabled, demanding the automatic insurance be paid out. You cant have it both ways.

If you think insurance companies , by offering you insurance without a medical or any health check are ripping you off. Try getting insurance when you are ill.

Do you complain about your council rates and water rates? I do and get them regularly decreased as it is based on the value of your house. Many companies charge a fee, if you don't query it, why would they change?

You say you are self employed, I'm sure many of your customers just pay the going rate, without question, some do complain and get a lower price. You cant blame your business for this, yet you want to blame insurance on your apathy

If you can't see that superannuation is just a tax vehicle (it is the underlying investments that show it going up or down in value) You must have a very BAD accountant

Reading through many of the sentiments expressed here and in other forums, concerning those folk who've embarked upon their own self-fundered super schemes, I realise how fortunate I've been to have access to a government pension.

For two reasons really, I have virtually no understanding nor appreciation of the complexities associated with many of the Super Schemes that are offered by the various funds. Funds that occasionally go 'belly up' through the rank incompetence and greed of many of directors who run them.

And secondly, when in receipt of a government pension one need never have to worry, about the integrity or qualities of the administrators who run the government schemes. I believe there're so many 'checks and balances' as well as auditory oversights of their day to day activities ?

I have friends who've worked inordinately hard and saved diligently, and deposited as much money into Super, as the ATO allows, and in recent times have had to watch much of their 'paper worth' diminish, because of the current economic climate, and the low interest rates that are set by the RBA.

I understand these economic factors have a similar influence on the government funds, but they seem to have far greater repercussions on the smaller groups, that many of the self-funded retirees contribute to.

It must be so, so tough on these poor buggers, who've worked hard all their lives ?

I am waiting for the first Union fund to collapse. Then the Government will step in and give people some of their own money back. In the interim executives of these schemes are ripping everyone off.
It was thought up by Hawke and Keating two millionaires who would not go within a mile of this rubbish.
When the stock market crash happens we will be the ones who lose our money. The people in the know will have theirs stashed away nicely.

The only people profiting from superannuation schemes are politicians and business leaders. The ordinary person would be better off if he / she put that money into their home.

The ordinary person would be better off if he / she put that money into their home.

No they would not, you are assuming houses never drop in value, but in fact they are just as volatile as the share market. Get your house valued once a week and see how much it fluctuates. But no, people buy a house and 10 years later make a profit, the same with super (or should I say the underlying assets) The Aussie share market has returned an average of 9.6% over the last 50 years (even with recessions, GFC, Asian crisis, y2K, 9/11 etc) the residential housing market 8%, government bonds 5.5% and cash 4%.

If you have a balanced portfolio of shares , property bonds and cash, you will make a better return than residential property and its taxed at only 15% and after 60, no tax or CGT.

If we did not have super, as one person has suggested and leave it up to the individual, more people would be on the age pension, for some the ONLY savings they have is the compulsory super. Most aussies love debt not saving

Super is just a tax vehicle, if you leave it in an Union industry fund, of course money is going to ripped off you into union hands. If you take interest in your super (AND you should as it is your money) and get good advice from a financial planner, you will make more

Dear Kirby,

By "put that money into their home", I assume that Mr. Opinion meant:
1. First get rid of any debts on the home.
2. Fix and strengthen the walls and the roof so your house stands forever.
3. Invest in solar panels and double glazing, etc. to lower (or even eliminate) your electricity bills.
4. Plant trees to reduce your food bill.
5. Build a well-insulated cellar where you can store hard food for many years, then invest in that food.

This way, it really doesn't matter what the housing-market does.

If you have more money left, then you can lend it to other people as mortgage (with their own houses as securities). For you it's more than what you would get from the banks, for them it's less than what they would have to pay the banks.

Your own home is the only asset on which you don't pay the cruel inflation-tax, otherwise I would probably invest in gold and foreign currencies which do not decay like the Australian dollar, but alas, I would still be paying tax on the nominal increase.

And if you wasted your money foolishly, then go ahead and try to live on the age-pension alone - it's a miserable existence!

In fact, it is unfair that those who earlier wasted their money on luxuries should receive a pension and not others who lived frugally and saved: EVERYONE should receive the age-pension (which would then also be made a taxable income, so it could end up as a tax-offset), then there would be no incentive to waste. Where from? well you said that superannuation is a "tax vehicle", then it should be replaced with an appropriate and straight-forward tax.

Dear yuyutsu,

And 6. Sell it for a huge profit to one of the 10 million wealthy Chinese migrating to Australia soon and retire to someplace really nice.

I agree completely.

Most young folk I know, including my kids, would be much better off with all their money in their pockets, while buying houses, funding kids & getting established, rather than giving it to some rip off super fund, who will manage it less well than my great aunt Dillbury.

I have found you don't need very much money to have a great old age, provided you are debt free, own your home & all the things, necessities & toys, you may need, & have no desire to impress the neighbours.

This desirable state is much easier to attain if you have all your money to use at the most expensive time of your life.

Super is perhaps of some use to wastrels, who would piss all they got up against the wall. That there are these no hopers in the world is no reason to penalise all the more prudent folk. Most could more usefully manage their money than any fund manager.

By the time today's 30 somethings get their hands on any super the managers have got left, there will be so many restrictions on what they can get & how they can spend it, it won't be much use to them anyway, if current trends continue.

Dear Kirby483,

You wrote;

“If you think insurance companies , by offering you insurance without a medical or any health check are ripping you off. Try getting insurance when you are ill.”

With respect I think you are missing the point. I have no issue with insurance and pay for various forms of it, but as revealed in the Crikey article the Superannuation companies make much greater margins and fees on insurance policies than they do ordinary super contributions. This is why the default to them. If I want insurance I can apply for it but it shouldn't be forced on me by stealth nor by a company that is suppose to be assisting workers to put away for their retirement.

My child started started working full time just recently but had been doing part time work through university. Checked their fund and yes most had been once again gobbled up by a default insurance policy. They're young, healthy and just starting their working life. With extra income they jacked the policy from one to three units thus clawing more out of her future retirement fund. The Crikey article detailed that this can mean $100,000 less when it matures.

Thieves!

Dear rehctub,

Full agree about the paperwork around employing people. It has the capacity to drive me absolutely bonkers and is a real disincentive to employing people for short periods of time when there is a rush on so you end up flogging yourself to death doing the work yourself. About 15 years ago I proposed a different scheme and had the blessing of the ACTU and other groups. Couldn't get it up though.

Regarding super, there should be a return to a government super fund for part timers so that the contributions are protected.

Dear o sung wu,

The parasites have so terribly ransacked the superannuation sector that I would love to see it return to government running it. Count your blessings. There are many things I think are done better by the private sector but this is clearly not one of them.

SUPER,the greatest rip off in Australian History.
TRILLIONS invested in the Stockmarket,was just paper now electronic.
The young are told to invest because by the time they retire there will be no aged pension.
Poor parttime and casual employees are the BIGGEST LOOSERS.
Their super is invested into different funds by different employers and when they tell the employer to invest in a particular fund,the wages clerk ignores them.
They then wait three months to find if the employer has put it in the fund.
Having found the few dollars they then have to show birth certificate etc,etc,etc to get the few dollars transferred.
By this time fees have been added and the employee has a zero balance.
My young son has worked and had $2000 stolen in fees.He is now 21 and does not have one cent in Super.
GREAT SCHEME when the financial crash happened billions were LOST.
Robin Hood robbered the rich and gave to the poor.
The Sherriff of Nottingham started the Australian Super scheme.

Kirby 483 while property is out performed by shares investors are less likey to realize their losses in property.

HASBEEN you've spoken the most prophetic and significant words I've heard in this debate thusfar, when you said:-

'...I've found you don't need very much money to have a great old age, provided you are debt free and own your home & all the things, necessities and toys, you may need, and have no desire to impress the neighbours...' !

Absolutely correct. You cut your suit according to your cloth. Accumulation of unnecessary debt over a lifetime, without the ability to adequately service that debt, is an easy way in which to advance along that road to economic perdition !

An alarming trend with super is to use ones super money to provide income protection.

While this may appear to make good sense, being insured against illness and all, what it is actually doing is depriving peoples super of its maximum potential as the credits are often being all but eaten up by these insurance policies, policies that are only beneficial if one makes a claim.

I think governments need to crack down on this practice and even look at allowing insurers to pay premiums via salary sacrifice, external to their super funds, as the benefits would be less people on the pension because where we are headed is a situation whereby many will have little in super due to their PI insurances.