Now we know how the government will steal your retirement pot

I don’t know how many times I’ve told you. But the government is coming for your retirement money. The Superannuation system is their trap.

Once your money is in, you can’t get it out. Then, they come for it.

But it was all just speculation on my part.

I didn’t know how they’d do it.

I didn’t know how they’d sell it to voters either.

And I didn’t know when they’d slam the door shut behind you to prevent escape.

All I could do is warn you it was coming, somehow.

Well, now we know a great deal more…

The first phase of the theft has been unmasked.

The government will pressure Super funds to invest in things the government would otherwise have to pay for.

The Australian Financial Review reported on the 10^th annual superannuation lending roundtable in Sydney. It laid out the plans:

Prime Minister Anthony Albanese wants to leverage the country’s sprawling $4.5 trillion superannuation pool as a national asset, but the proposal drew sharp pushback from Westpac chief executive Anthony Miller, who urged the government against dictating the investment strategies of major funds.

“There is a real potential to see these funds as a national asset that can be used more appropriately and get better returns as well, not just for individuals and for retirees, but for the nation,” Albanese said.

Former Victorian premier Daniel Andrews, at the same event, supported the push for consideration of “national benefits” in super, urging the government to use vehicles such as the National Reconstruction Fund or Clean Energy Finance Corporation to entice funds to invest in “sovereign capabilities” or resilience.

“[Investment in] productivity challenges like housing, infrastructure, energy transition, water, or dare I say, pandemic preparedness – that’s a wholly efficient and good repurposing of a portion of that national savings pool,” Andrews told top executives and policymakers at the forum.

You know you’re in trouble when two Labor politicians agree on something.

But redirecting the ‘national savings pool’ that is your own personal Super balance is an indirect tax. It delivers a lower return to your Super and avoids a bill for the government. The net effect is a transfer from you to the ATO.

Personally, I had expected the government to require Super funds to hold government bonds directly. This influx of money would reduce government bond yields. That cuts borrowing costs for government, but also reduces returns for investors in government bonds.

Again, another thinly veiled transfer of wealth from you to the government. Especially during a period of inflation. It’s known as ‘financial repression’ – a common tactic of governments.

But they’ve chosen a different path instead. To reallocate your capital to pay for public services.

Who votes for this bait and switch?

However they end up pushing the indirect transfer of Super wealth to the government, we now also know how it’ll be sold to the electorate.

The government is describing the Super system’s assets as some sort of national fund. That’s rather different to how it used to be described – as your own personal savings and investment vehicle.

They are breaking the link between you and your assets.

Because the Super system was set up by the government and given tax breaks, it supposedly somehow falls within the political sphere of control.

That marketing strategy will work well on many people. Most voters likely have no clue what’s in their Super. But they like the idea of a politician investing it for them to provide goodies they don’t want to pay for, or pay taxes for.

You might think all this is complete rubbish. It’s your money, kept separate, owed to you, contributed under the understanding that it would be invested properly.

But why does it matter what you think!? We live in a democracy. Property rights can be violated by way of majority vote.

Your money is now part of a ‘pool’ and a ‘national asset’ that should be invested for ‘national benefits.’

This was entirely predictable.

Besides, the real blow is yet to come…

The next step is the one Super’s architect is now pushing for.

Super was always about relieving the burden on the age pension

Former prime minister Paul Keating reckons we should ‘merge Centrelink with superannuation,’ writes the AFR in another article about the Sydney roundtable:

Former prime minister Paul Keating – the architect of the nation’s sprawling $4.5 trillion superannuation sector – has told the government to integrate its public social security system with the private retirement savings sector, in what would be the single biggest shake-up of the aged pension in decades.

The radical proposal to merge parts of Centrelink into the major super funds […]

This shows how the true purpose of Super will be enabled. It was always about lightening the burden on the age pension.

Keating’s suggestion reveals that the Super system was indeed set up to collect a vast pool of private assets, before socialising their outflows.

If you did the ‘right’ thing and maxed out your Super savings, you will soon pay the price in a reduced age pension.

This is ironic, but no more than other government policies.

The government also has an ongoing PR campaign to frame it as ethical. Here’s how they’ll do it…

Retirement planning currently revolves around how to ensure you get the age pension. Other asset allocations and financial decisions are about ensuring this. That’s because it is such a valuable flow of cash.

To ensure people contributed heavily to Super, the two were not made mutually exclusive. You could get both. That’s why people were willing to save and contribute. It was the bait in the trap.

Soon we’ll discover that the whole point of Super was to ensure retirees are less of a burden on the state finances.

Don’t you remember that being said?

No?

You must be getting old, then…

You might have contributed to Super in the belief this would not disqualify you from the age pension. But times have changed.

It would be unfair and unnecessary for those with large Super balances to still get the age pension. And unaffordable.

It’s basic bait and switch. A politician’s bread and butter. If you didn’t see it coming, you must be new to our newsletter and live under a rock.

Why pull the trigger now?

Politicians are running out of time to make their move. The AFR explained why:

More than a million Australians intend to retire over the next decade, which will put growing pressure on super funds as they approach an inflection point where more cash is being withdrawn from the system than is contributed by members. UBS estimates this point could be reached in 2033.

Once the Superannuation system acts as a drag on financial markets instead of a rising tide, the system will crash. There will be too many sellers and not enough buyers to keep prices high.

Then people will demand their retirements are paid for by governments anyway. That means those of us who prepared adequately for retirement by contributing to our own Super will be robbed to fund those who didn’t.

That’s a lot easier to pull off if the Super system is already under the thumb of government and combined with the social security system.

At least everyone is admitting it now…