Let’s think through the role that superannuation plays in Australia.  

Super was introduced because a few smart folks realised in the 1980s that the large cohort of young baby boomer workers would eventually retire. 

Such a mass retirement would put unbearable pressure on the existing pension system. The financial foundation of retirement had to be reimagined. So, the super scheme was dreamt up.

Let’s force each worker to put a certain share of their income aside.

To make the pain of being forced to save your own money, Australians get taxed very little on their super savings. This way, most Australians will end up paying for their own retirement.

Personally, I remain a fan of the idea behind superannuation, even though I see some structural changes on the horizon.  

Let’s put ourselves in the shoes of today’s superannuation system. Imagine you are handed a few trillion dollars and told to invest it for the long term. No quarterly panic. No hot money. Just decades of patient capital. What would you build? 

That is not a hypothetical. It is the reality of Australia’s superannuation system. 

Most Australians think of their super fund as a simple product – a place where their money goes, grows and eventually funds their retirement.

In that narrow sense, a super fund exists to maximise returns and minimise tax. But that view misses the bigger picture. Super funds are no longer just investment managers, they have become some of the most powerful economic actors in our economy. 

Obvious role of super funds – grow the money

Super funds are legally required to act in the “best financial interests” of their members. That means they must invest contributions prudently, deliver strong, long-term, risk-adjusted returns while keeping member fees low.

They do all this while taking advantage of the concessional tax environment. That’s the core business of super funds and it matters enormously. Over a working life, small differences in returns compound into life-changing differences in your retirement balance. 

If that was the whole story, super funds would only be boring ETFs with a tax advantage. They are far more. 

The hidden layer – insurance and discipline 

Every time a new young worker joins the super system, something else happens behind the scenes. The worker becomes part of a........

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