Comment: unfair super system needs overhaul

Superannuation is a good idea. But it should not be a magic pudding for the wealthy, a poor deal for low-income people and a straitjacket for too many of the rest, argues Professor Julian Disney, director of the social justice project in the Faculty of Law at UNSW.

In an opinion piece published in the Sydney Morning Herald, Professor Disney writes that despite some improvements made in last month's budget, "the basic structure of the superannuation scheme remains unnecessarily complex, unfair and wasteful. It is increasingly ill-suited to the needs of the community and economy".

"Reform should start by taxing compulsory and voluntary contributions in the same way as wages and salaries. The Government should then match these contributions, up to a modest specified level. These "co-contributions" should be at rates designed to improve current concessions for lower-earners and reduce excessive generosity for higher-earners.

"Another key reform is to reduce the extreme generosity towards withdrawal of large lump sums. It gravely compromises the system's goals of providing security throughout retirement and restraining pension expenditure.

"A third area for reform is the relationship between saving for retirement and saving for midlife events such as ill-health, unemployment or full-time parenting.

"These reforms would provide a more balanced, efficient and equitable system to encourage saving for both retirement and midlife needs," Professor Disney said.

Read his full opinion piece on the SMH website.