The internationally-renowned community advocate, Rhonda Galbally, made a piercing observation about us all at last month’s Australian Institute of Superannuation Trustees’ Sydney luncheon discussing retirement adequacy.

“The lack of a whopping great inheritance tax shows Australians don’t mind social inequity,” she said. It’s certainly true that older, cashed-up Australians have been doing disproportionately better out of recent retirement policymaking than anyone else. Super is now a tax-free honeypot once you reach 60, and it will surely surprise no-one that people around that ‘certain age’ are by far the biggest exploiters of the superannuation co-contribution, according to AIST research revealed at last month’s CMSF conference.

A boon for older people with higher disposable incomes, the AIST’s survey found that accessing the co-contribution was seen as something of an unattainable luxury by low-income earners and young families, with those of the latter group able to maintain a mortgage putting that squarely as their first priority.

Unfortunately for those battlers waiting for a leg-up from the Government’s proposed First Home Saver Accounts, they will face similar barriers of entry to that scheme (in it’s draft form at least) as those which are already locking them out of the co-contribution. They will need $1000 up-front to establish an account, and then to keep it going will need to pour in at least another $1000 in at least four years. As the AIST’s co-contribution participation study illustrated, young families and low income earners just don’t have that kind of cash to spare.

But for people on below-average incomes, it would seem that any kind of longer-term savings project is not a major priority. That was shown starkly in a Roy Morgan telephone poll commissioned by the Australian Workers Union last month.

While overall the poll found that more Australians (47 per cent) would prefer some of the $31 billion of Labor’s ‘me too’ tax cuts be siphoned into superannuation than those who wanted the full tax cut (36 per cent), among those earning under $50,000 a year it’s a different story. Only 44 per cent of those below that median income level were prepared to give up some instant gratification in favour of superannuation. However, 53 per cent of those on more than $50,000 favoured some top-up to super, with concerns about inflation given as a key reason.

Obviously when you’re struggling to make ends meet, a lecture on the miracle of compound interest in the last brochure from your super fund is not going to impress as much as that final notice on your power bill.

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