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Super's Cynical Confusion

The complexity of Australia's superannuation system has been highlighted by a survey of financial literacy sponsored by ANZ. The survey of 3,500 people found that only 40% could read a superannuation statement compared to 85% who understood bank account and credit card statements. The federal government believes this illiteracy problem can be solved by a $14 million education campaign and that it people are able to make more choices about their superannuation they will improve their understanding.

The survey results are being used as ammunition for both sides of the debate over letting employees choose which fund their employer's compulsory contributions are sent to.

A fundamental explanation for poor understanding levels is that complexity and excessive taxation added to superannuation by both Labor and Liberal governments since 1983. This has lead to a system incapable of being understood by even highly trained academics. Tax is levied on contributions as they go into the fund, on investment income as it is earned in the fund, as surcharge on contributions if the person happens to be over a certain income level at any time, and on benefits when paid out of the fund. Government spending on attempting to educate people about superannuation would be better deferred until the complexity can reduced.

Posted Sunday, 4 May 2003

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