Super changes takes the "Super" out of retirement.

Today there are reports that Treasurer Scott Morrison is considering more superannuation reform options? I’m sorry Mr Morrison, the damage has already been done and most people (including myself as a former financial adviser) do not embrace a metaphorical match where the referee changes the rules midgame and calls for play-on.

Back in what seems to be a bygone era (prior to 2007), all changes to the superannuation system were grandfathered. That is, all superannuation assets that were invested under the then existing rules, would be subject to those rules until the funds were accessed at retirement. Any subsequent changes to super would only affect future contributions made after the legislative changes had been enacted. It was this ‘Superannuation convention’ that lent confidence to Superannuation being seen as a solid investment structure, and resulted in high levels of support. Unfortunately we then had a change of Government, which saw the reigns handed over to the hapless and directionless Rudd and Gillard Governments who ignored this convention, passed legislation targeting retrospective investments, and created a significant "Superannuation risk".

When an investor decides to forgo consumption and places their assets in escrow for retirement, it is imperative that the rules not be changed to materially alter the foundation upon which these investment decisions were made. Why? Because it is this very foundation that enables investors to plan their financial strategies to meet their retirement needs.

During the Keating/Howard eras this “Superannuation convention” was acknowledged and respected. As such their Governments protected investors against this "Superannuation risk", and in the process encouraged billions of dollars of investments to be placed, which benefited the Government in the form of a reduction in future public pension liabilities. Everybody won! However, as a direct consequence of the post 2007 Federal Government legislative changes, class war rhetoric and general lack of respect and distain for this convention, "Superannuation risk" is now real and in my view, one that outweighs its’ corresponding reward.

Prudent reasoning dictates that before one should even entertain contributing additional assets to their superannuation investments, the Federal Government must first be persuaded to no longer consider rule changes that are to the detriment of existing superannuation investments, and that any such change is both unacceptable and untenable. To fail this and passively accept that the Federal Government can and will change the rules for existing superannuation investments, renders the risk of Superannuation too high and the reward much too small and uncertain. In short, we as investors ought to demand a reinstatement of the Keating & Howard’s ‘Superannuation convention’, enacted by way of an irrevocable bipartisan statute. Why irrevocable? Because Governments (at this time anyway) are simply not to be trusted. Political parties stand for re-election and little else. We must stand up and scream, like we would at a referee who changes the rules during a football game. It’s our money, our retirement plans, not theirs. We must avoid at all costs being the sheep who blindly follow the goat to the top of the slaughterhouse steps, only to realise it’s too late.