The competition to manage your superannuation is big business. So too is not paying superannuation to workers. Either way, an enormous number of employees are duped and dudded by Australia's existing superannuation policy.
An estimated 650,000 employees miss out on a staggering $2.5 billion in superannuation payments each year, with Clive Palmer's Queensland Nickel the latest company to be accused of defaulting on paying super.
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Women are becoming second class citizens in retirement with their superannuation nest eggs about half the size of men. The Turnbull government accepts there is a problem and reform is needed.
Compare the recent wage scandal that enveloped 7 Eleven. It is estimated to involve $50 million in underpayments of wages over 10 years.
Unlike cases of wage fraud, employees are not able to take action to recover their lost superannuation. In many cases, employees are unaware that their super has not been paid. It is commonplace for employees to be duped by payslips which falsely state that superannuation has been paid. Businesses use their employees' superannuation as a source of capital, particularly when they are struggling. Current regulatory policy does not provide a sufficient deterrent.
In the debate about "choice" in superannuation, scant attention is paid to the manner in which employees are deprived of the choice to pursue their unpaid super. The task of recouping unpaid superannuation is the exclusive domain of the Australian Taxation Office – the same body that has been swamped by massive job losses and aggressive corporate tax avoidance schemes in recent years. It cannot recover much unpaid superannuation or company tax because it simply doesn't have the resources.
The situation is so dire that in July 2015, the ATO proposed an amnesty to businesses that were not paying superannuation.
In September last year, the federal government introduced laws that seek to reduce penalties for businesses failing to pay superannuation, arguing that the current penalties were too high and may dissuade some businesses from reporting a late payment. Would 7 Eleven have self-reported if penalties for wages underpayment were smaller? Hardly.
Too add to the perverse policy mix, the Turnbull government has announced it will introduce new laws designed to shift more employees into bank-owned superannuation funds. For the financial services industry, this announcement is cause for celebration. Compulsory superannuation is manna from heaven for the industry.
Since compulsory superannuation was introduced, almost $2 trillion has flowed into Australia's superannuation pool. The financial services industry hungrily competes to manage the multi-billion-dollar "fee factory". While the industry is obsessed with superannuation, it's a very different story for the people whose savings it manages.
Understandably, many people associate superannuation with retirement and death. For most of their working lives, people don't want to think about the end of their working lives or the end of their lives. The combination of employee lack of interest in their retirement income and the zeal of the financial services industry to profit from it is toxic.
You can guess who wins. The retirement savings of many Australians are being gouged under their noses to the tune of a lazy $21 billion each year. According to David Murray's Financial System Inquiry, the fees extracted for managing superannuation in Australia are among the highest in the OECD.
Retail superannuation funds in Australia owned by the hugely profitable big four banks are in permanent campaign mode to overthrow industry funds as the dominant force in managing superannuation. Compared to superannuation, the banking industry's traditional work in lending and paying interest on deposits is boring and not particularly profitable. At stake for the banks is a huge and growing source of profit. Unlike the retail funds, industry funds are not for profit. Not-for-profit funds clearly outperformed their rivals – once again – in 2015, returning 6.7 per cent compared to 5.2 per cent.
Why would any government try and steer more people into inferior funds that charge higher fees and generate less savings? One word: unions.
The banks have an ally in the Turnbull government, which argues that employees should be given greater "choice" in their superannuation options – knowing full well that most employees don't make rational or informed decisions about their super fund and are not interested or equipped to navigate a maze of hundreds of complex investment options. As the Economist recently observed, "financial products are not like toasters, where a consumer can instantly see if something is wrong; it may take years (decades in the case of pensions) for the problems to become apparent. By that time, it may be too late for consumers to repair the damage to their wealth".
Why would any government try and steer more people into inferior superannuation funds that charge higher fees and generate less savings, with the inevitable result that greater reliance will be placed on the pension to fund retirement? One word: unions.
The better performing superannuation funds are jointly managed by union officials and employer representatives. The banks' campaign may be driven by commercial imperatives but for the federal government this latest policy announcement is purely ideological. It is a measure of the Turnbull government's visceral hostility to trade unions that it is prepared to further entrench the budget's structural deficit in implementing this policy.
While the inception of compulsory superannuation was rightly hailed as a ground-breaking innovation, the current system is riddled with serious structural and policy flaws. Employees are left powerless in contending with a business that fails to pay superannuation. Even if they work for a compliant employer, excessive fees will substantially diminish their savings and place greater pressure on the public purse to fund retirement.
The dictates of demographics and economics necessitate a root-and-branch overhaul of the superannuation system, underpinned by one simple objective: how does Australia provide a decent retirement income for all and what is the role of superannuation in achieving that objective?
Josh Bornstein is a Melbourne lawyer. Twitter: @JoshBBornstein