24/08/2026
Monday Money Talk with Noel Whittaker
Superannuation has suddenly become everybody’s favourite pot of money.
Last month Prime Minister Anthony Albanese said there was “real potential” to see our super funds as “a national asset” that could produce better returns not just for individuals and retirees, but “for the nation”. That immediately raises the question: whose money is it? Pauline Hanson has come at it from the opposite direction: “It is their money.” With Australians struggling with mortgages and the cost of living, she believes the rules should be loosened so people can get their hands on more of their super when they need it.
Then there’s the Liberal Party. Opposition Leader Angus Taylor leads a party that has already advocated letting Australians use their super to help buy a home. On television last Monday night he went further: “It’s the people’s money. They should be able to do what they like with it.” And then, almost inevitably, the aptly named Senator Andrew Bragg weighed in, declaring superannuation one of the biggest public policy failures since Federation.
So now we have three very different approaches to the same $4.5 trillion pot of money. The Prime Minister sees it as a national asset. Pauline Hanson wants people to have greater access to it. The Liberals say it’s the people’s money and they should be able to decide what to do with it. It’s a debate worth having, because behind all the politics lies one fundamental question: whose money is your superannuation?
To answer that, let’s go back to the architect of our modern superannuation system, former Prime Minister Paul Keating. He once told me: “I wanted an Australia where every worker would have money put away for their retirement, professionally managed so they could benefit from compound interest, and protected until they reached preservation age.” It was a simple idea, but its impact has been profound.
In the early 1990s compulsory employer super started at just 3%. Over the years it was gradually increased, with the final step to 12% reached only last year. It was hardly a smooth journey. There were repeated attempts to stall the increases and, at one stage, enormous pressure to freeze the guarantee at 9%. Fortunately, the system survived, and millions of Australians are better off because it did.
I’ll never forget an email I received from a 66-year-old woman. “I have no home, and my only asset is $250,000 in super. How will I cope in retirement?” I explained that at 67 she would qualify for an indexed age pension of around $30,000 a year for life and could also draw about $18,000 a year from her super – enough to last until at least 90. Her reply said it all: “Thank you. You’ve put my mind at rest.” For people like her, super means choices, dignity and independence.
Critics of compulsory super have always argued that workers would be better off getting the money now instead of having it locked away for decades. It sounds attractive, but it ignores one basic fact: human nature. People adapt their spending to whatever lands in their bank account. They don’t miss the 12% going into super any more than they miss the tax withheld from their wages. But they certainly notice that money when they retire.
Take a 40-year-old earning $55,000 a year who already has $100,000 in super. Their employer contributes $6,600 a year. If that money were paid as wages instead, tax would take 30% and the rest would almost certainly disappear into everyday spending. Without compulsory super, much of that money would simply vanish over a lifetime, leaving the age pension to do far more of the heavy lifting.
Now leave the money in super. Assume wages rise by 3% a year and the fund earns an average 8%, and by 65 our worker could have around $1.3 million in super. Of course, $1.3 million in 25 years won’t buy what $1.3 million buys today. At 2.5% inflation, it would be worth roughly $700,000 in today’s money. But that’s still $700,000 of retirement wealth that probably would never have existed.
And that is the genius of compulsory super: it happens automatically. The money is invested before it can be spent, compound interest is given decades to work its magic, and people who may never have thought of themselves as investors can reach retirement owning a substantial portfolio.
There are, however, two ways super can sensibly be used to help people into their first home without simply turning it into an ATM.
The first was the Liberal proposal to allow first-home buyers to take up to 40% of their super, capped at $50,000, to help with a deposit. The important part was that the money was not simply gone forever. When the home was eventually sold, the amount withdrawn would be returned to super, together with a share of the capital gain. In other words, it gave young people a leg up into the housing market while protecting their retirement savings.
The other is the existing First Home Super Saver Scheme. This works differently. Prospective first-home buyers make extra voluntary contributions to super, taking advantage of its concessional tax treatment, and can later withdraw eligible contributions plus associated earnings to help fund their deposit. Up to $15,000 of eligible contributions from any one financial year can count towards the scheme, with a maximum of $50,000 available for release, plus associated earnings.
The crucial thing about these proposals is that they do not simply raid the compulsory super put away for retirement. One effectively lends them some of their super to buy a home and requires it to be restored later; the other uses super as a tax-effective vehicle to build a deposit. Both preserve the basic principle of keeping super to fund retirement. That’s very different from opening up everybody’s super whenever money gets tight.
That’s why we should be very careful when politicians start eyeing that $4.5 trillion pot. It may be called a national asset. It may be tempting to raid it for housing, mortgages or today’s cost-of-living pressures. But Keating’s original principle remains the right one: superannuation is the worker’s money, put aside for one purpose – to give them a better retirement.
Once we start treating it as money for anything else, we risk destroying the very thing that made it work. Superannuation is more than economic policy. It’s a social contract. It asks people to give up a little today so they can have much more tomorrow. And its great strength is beautifully simple: it happens automatically.
Noel Whittaker is the author of Retirement Made Simple, Wills Death and Taxes and numerous other books on personal finance. Email: [email protected]
