Bill Kelty and Paul Keating were in furious agreement just four years ago on the 30th anniversary of the introduction of compulsory super in 1992. In their joint – and expansive – interview with the Australian Financial Review, they confirmed their belief that the ‘super wars’ between Labor and the Coalition were now ‘dead and buried’.
Well so much for that idea!
Instead right now we have a major collision between policy, politics and the retirement futures of the millions of Australians who have yet to access their super.
It all started with a policy release from One Nation that suggested fund members should be able to access 3% of the compulsory 12% super contribution, for a period of three years. The reason for this change, according to One Nation, is because these Australians are ‘smashed’ by cost of living increases and ‘need help now’.
Reactions were swift and definitely party political.
Treasurer Jim Chalmers described the policy as a ‘full-frontal attack’ on super and ‘anti-worker’. He went on to claim that the next election would be fought on this issue as it was a ‘recipe to destroy the super system as we know it’.
Federal Liberals leader, Angus Taylor, said that the One Nation policy ‘lacked critical details’ and ‘raised unanswered questions’, while many unnamed insiders suggested that One Nation had merely brought forward a policy that the Coalition was still fine-tuning.
So what is best for ordinary wage earners who hope to at least, live a dignified retirement, if not a comfortable one? What’s the ideal policy for the contribution and access rules? To answer that, it's useful to go back in time to the genesis of super and how it has evolved into what is considered a world-class solution to funding the needs of a nation’s retirees.
Where it all started
Compulsory super officially began in 1992, but its origins stretch back decades.
Union-negotiated retirement schemes had been emerging since the 1930s, paving the way for a broader agreement between the Hawke Government and the Australian Council of Trade Unions (ACTU) in the 1980s.
Put simply, this was an agreement whereby workers would defer wage increases in lieu of a mandated 3% contribution, made by employers, to an approved super fund. As Liberal Senator Andrew Bragg has observed, super was therefore conceived and remains, deferred wages. The arrangement helped moderate inflation while giving workers an additional source of retirement income beyond the Age Pension.
How it’s going
It has worked very well.
On an individual level, the magic inherent in deferred access to these savings is, of course, compound interest. The longer your money is tied up, the more you will have when you meet the conditions of release to access it. So while those who were 50 or older in 1992 retired long before their super savings had a chance to mature, those retiring today have had 33 years for their savings to accrue and compound. As reported by the ATO, median super balances for 60-65 year olds have now reached $231,000 for men and $217,000 for women.
From a government perspective, compulsory super has created a huge pot of investment capital (4.8 trillion according to APRA on 30 June this year) - money that has significantly boosted our balance of payments while helping fund airports, roads and railways.
Super is also an intergenerational success. According to findings from the 2026 Intergenerational Report, the growth in super savings has led to a lowering of the number of retirees on a full or part Age Pension (66% in 2025, forecast down to 52% by 2066). Age Pension spending is also projected to decline as a share of GDP, from 3.1% in 2025, to 1.8% by 2066. This makes Australia a bit of a wonder child in the OECD world rankings, when compared to the United Kingdom (10%), Canada (8%) and the United States (6%), who are all spending considerably more.
So it’s unsurprising if alarm bells ring when someone suggests raiding these savings to pay for the here and now in the form of medical bills, rental outgoings and mortgages.
Is early access a good idea?
The first clarification is that early access is already allowed, albeit with strict conditions. Generally speaking, these conditions of access include terminal medical conditions, financial hardship including foreclosure, the first home saver scheme and certain compassionate grounds.
When you turn 60, provided you meet the conditions of release, you can withdraw funds. And at age 65, you can access your super regardless of whether you are working or not. These requirements are obviously stricter than the One Nation policy which could affect seven million Australians.
This release of funds is mainly intended to be used for mortgage repayments or rental pressures, but to date there are no clearly defined restrictions on how this money can be used, nor on how the individual fund member’s spending will be monitored.
The main criticism of this policy is illustrated by Super Members Council (SMC) projections that a 25-year-old (earning median full-time income of $90,500 per annum and withdrawing three percent over a three year period) would take a hit to their retirement savings of $25,000. This modelling assumes this person retired at age 67. SMC projects that a couple who also retire at 67 would be more than $50,000 worse off.
Ex-Grattan Institute CEO John Daley spoke out in support of the notion of a 9% mandatory savings level, saying ‘the core of One Nation’s policy is sound’ as the current 12% contribution exceeds what is needed for an adequate retirement income. Which brings us to the point of whether there is some merit in the One Nation policy when we ignore the heated political argy-bargy.
There’s no need to shout – why not discuss?
I’m a great fan of Australia’s mandatory super system and agree wholeheartedly with Treasurer Chalmers, Paul Keating and Bill Kelty when they say we have a world-class system. That we do. But that doesn’t mean it can’t be improved.
It’s ok to question it and discuss whether it could be changed to benefit even more people. That would require a mature debate, but let’s cross our fingers and assume that this is possible.
What could be changed?
Five questions we need to explore:
Question 1: The first question is whether the current strict access conditions might be relaxed a little. And if so, for which reasons and how will this be managed by an overburdened bureaucracy. It’s fine to have bright ideas, but someone, somewhere has to carry them out.
Question 2: Is 12% the ideal amount? Should it be 9%? Can this be modelled given that the genie came out of the bottle when the final SGC increase moved to 12% in 2025?
Question 3: Are concessions on super too lenient? Modelling by The Australia Institute (TAI) shows these concessions go overwhelmingly to those with higher savings and are, from 2023, on a par with spending on the Age Pension. Is this a wise use of taxpayer dollars – or a further perversion of what was intended to be a fair and universal super system?
Question 4: The divide between rich and poor can be intra-generational as well as intergenerational. According to ACOSS, if poverty is defined as 60% of median income, 32% of Australians on the Age Pension live below this rate. Should the savings on Age Pension provision forecast in the IGR be used to increase the base rate and Commonwealth Rent Assistance for those most in need?
And lastly – but perhaps most importantly…
Question 5: Which problem, exactly, are we trying to solve? Is it housing supply, equitable wealth distribution, or regulation of rental increases? Does the fact that super has been such an outstanding success in achieving a ‘pot’ of nearly $5 trillion mean it’s seen as an answer to all of the above? In which case, should the current system be (largely) left alone to deliver what it set out to do – more comfortable retirements for the many, rather than the few?
What say you?
These are just some of the important questions sparked by the current media ‘scrum’ related to the reignition of the super wars. No doubt there are many others that deserve scrutiny. Our super system has probably been far more successful than many predicted. But this shouldn’t mean that it can’t be questioned.
Do we now need to allow earlier access - despite the original Accord which awarded tax advantages in return for leaving it locked up until retirement?
Kaye Fallick is an independent retirement commentator and author, www.kayefallick.com. This article is general information and does not consider the circumstances of any person.