The World Bank has looked at these issues in perhaps the broadest context of any policy maker or commentator. In 1994 it came up with its Three Pillar model, and expanded that to Five Pillars in 2005/6. The first four pillars in the expanded model cover universal and social welfare schemes targeted at ageing and occupational and personal pension provisioning, whether voluntary or fully or partially funded. The fifth pillar is broad and covers financial and non-financial assets and formal and informal support outside superannuation.

Successive Australian governments have advised that they see the age pension as part of the overall superannuation system in terms of adequacy of income in retirement. The Retirement Income Taskforce (RIT) within the Federal Treasury, for example, tests the combined income obtained from SGC contributions and the age pension against the Henderson poverty line, the ASFA/Westpac ‘modest but adequate’ income standard and various replacement ratios. In my view the age pension was conceived as, and predominantly is, a social welfare measure. This is clear from the fact that means testing governs access to it; it is not a universal benefit that all Australians can factor into their retirement planning, but it is available for them to count as an insurance mechanism in case their other plans don’t work out the way they hope.

What might you find in a superannuation scheme? Contributions and account balances within regulated limits, investment income, taxation, insurance against death and total and permanent disablement, insurance against loss of income until a target age such as age sixty-five… Perhaps even access to ancillary benefits negotiated by the scheme managers in the nature of “frequent contributor” benefits?

What information do members need to decide how much to contribute and insure, and what strategies should be followed to generate a desired investment income? For contributions you need to take account of SGC requirements. You need to target a level of retirement living that is comfortable and realistic. You need to look at the total means available to you to reach and finance that level of living, including other assets such as the home, the goodwill in your small business etc and other benefits such as the age pension and pensioner healthcare cards. You need to decide the best place to fund your retirement living, either inside or outside superannuation. You need to look at what incentives exist that you can reasonably access, e.g. salary sacrifice, co-contributions ……The list goes on. Of course, contributions don’t exist in a vacuum and any projections of their future worth must take into account the investment strategy and environment and other aspects of taxation. The process is necessarily interactive.