Should Australia scrap superannuation? Experts clash in heated debate

Australia’s superannuation system has come under intense scrutiny after two financial experts clashed in a fiery debate on SBS’s Insight, with one economist declaring the system should be dismantled entirely – and the other branding that idea “insane”.

The central question – should Australia’s superannuation system be scrapped? – sparked impassioned responses from both Cameron Murray, chief economist at Fresh Economic Thinking, and Andy Darroch, independent financial adviser and director at Independent Wealth Advice.

Dr Murray argued the system is fundamentally flawed and does more harm than good, claiming it primarily benefits the wealthiest Australians while failing to assist the poor or the already rich.

“It’s skewed to the people who would never be on the age pension and would be independently wealthy at retirement age anyway,” he told the program.

Speaking to news.com.au after the broadcast, Dr Murray pointed to major inefficiencies in the current setup, calling super an “unnecessary industry” that drains national talent and resources.

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He also raised concerns about accessibility, noting that one in seven men die before ever touching their super savings.

“Super doesn’t help the poor, who generally will still need to rely on the pension. It doesn’t help the rich, as they have enough wealth to support themselves,” Dr Murray said.

“It only increases the retirement income of the middle by making them poorer when they are young and poor with a family to support, so they can be richer when they are old and rich with no one to support.”

Dr Murray proposed a radical alternative: abolish compulsory super entirely and allow Australians to access that money during their working lives. He suggested a phased transition, with capped annual withdrawals and eventual conversion of super funds into non-tax-advantaged investment accounts.

In stark contrast, Mr Darroch defended the system as one of Australia’s greatest economic achievements. “You would have to be insane to want to get rid of it,” he said on Insight, calling Australia’s super setup the “envy of the world”.

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He said scrapping it would be “the single most destructive thing you could do to middle class Australians” and warned it could plunge a third of the population into poverty during retirement.

“I think Australia is the only country on Earth that you can have a nurse and a diesel fitter get to age 65 with close to a million dollars in super,” he said.

Mr Darroch also pushed back against arguments that superannuation could or should be used to address issues like housing affordability or the cost of living.

“Understandably, people see their superannuation balance and have a desire to use it to assist with housing,” he said, “but superannuation can’t and won’t fix housing. Any of the suggestions won’t even move the dial.”

Worse still, he warned, using super to fund home ownership or ease short-term cost-of-living pressures would ultimately “create systemic issues with poverty in retirement”.

As for Dr Murray, he believes that without super, most Australians would still save voluntarily and fall back on the age pension if needed – an existing system he says already keeps older Australians out of poverty.

“The age pension is the safety net,” he said. “We can quibble about its adequacy, but we should do it in the context of all welfare payments.”

With the future of superannuation now firmly back in the spotlight, it’s clear that while the system may need reform, whether to overhaul – or outright abolish – it remains a fiercely divisive question.

Images: SBS