Gloomy forecast for Aboriginal super


Dark-skinned hands holding pink piggy bankAt a recent conference hosted by the National and Torres Strait Island Council (NATSIC), a gloomy conversation point emerged. The discussion was meant to be about Aboriginal superannuation. But Anthony McCarthy, marketing development manager for Catholic Super, says a surprise was in store.

'Most of the questions were about funeral benefits and (provisions) for the beneficiaries,' he says. 'Almost none of the questions were actually about retirement or how to access money at an earlier stage during the life span. It was a little bit shocking. They didn't seem to see it as something they could access through their lifetime.'

Superannuation is not generally available before the age of 55. For most of the population of Australia this is scarcely a problem, as they are likely to live well into their 80s. The question tends to be more about whether there be enough of a nest egg to last that long.

But the average life span of Aboriginal Australians is much lower — according to the Australian Bureau of Statistics, just 67.2 years. Many will not live long enough to derive financial advantage from their super.

Graeme Mundine, executive officer for the Aboriginal Catholic Ministry in the Sydney Archdiocese , says the age difference between the Aboriginal and non-Aboriginal populations ranges between nine and 15 years 'depending on where you are living'. He says the average is about 12 years difference. 'It used to be 20.'

One reason the misalignment of life expectancy has not received great attention is that Aboriginal super is not well developed.

According to a recent report by the Association of Super Funds of Australia, 'Equity and Superannuation — the Real Issues', Indigenous Australians have lower coverage and lower balances on average than the general population. Indigenous Australians' coverage is about 70 per cent for men and 60 per cent for women, compared to 85 per cent for men and 80 per cent for women in the population more generally.

Average balances are also lower than for the equivalent Australian population as a whole.

Current superannuation arrangements and administrative requirements, according to the report, often do not match the circumstances and needs of indigenous Australians, particularly those in remote areas who may have difficulty communicating with their superannuation fund, claiming benefits or identifying lost accounts.

Craig Arthur, national administrator of the National Aboriginal and Torres Strait Islander Catholic Council (NATSICC) says the shift in governmental policy to raise the preservation and retirement age for superannuation access, which reflects the increasing life expectancy of the Australian population, is not representative of the Indigenous community.

'When that is combined with the increased financial stress suffered by Indigenous people, the argument for lowering the preservation age for Indigenous people grows stronger,' he says. 'Raising the (retirement) age will only make the situation worse.'

How, then, should superannuation be adapted to meet Aboriginal needs? Linda Burney, the Aboriginal member for Canterbury in the New South Wales legislative assembly, says there are many complexities to resolve.

'On the surface (reducing the retirement age) looks perfectly reasonable,' she says. 'But the practicalities of having different approaches in a regular super fund are difficult. It would be good if the big super funds took the issue seriously and had a practical discussion, which I don't think has happened. It is not as if nothing is happening. The Closing the Gap strategy is improving the life expectancy of Aboriginal people.'

A first step, apart from a willingness to discuss the issue, is to determine who should prosecute the case to change the treatment of Aboriginal superannuation.

'No-one has been put in charge of it; it is just a general discussion, a thought that has been bantered around a bit,' says Mundine. 'It is possible, as far as I am aware, to get the aged pension early if you are an Aboriginal; perhaps something similar is possible with super. But who is the best one to deal with it? If the (interested) groups are strong enough, they have to take it to NATSICC.'

Arthur argues that better education is important. 'The statistics reveal that Indigenous people spend a shorter amount of time in each job (for many reasons including short contracts, casual employment and other factors), and are more likely to have several positions over a working lifetime. The result is often small amounts of superannuation spread across several different funds.'

Developing more flexibility is another option, according to Arthur. He says that determining the time when superannuation becomes available is only part of a required rethink on 'future proofing' for future generations.

'There are currently extenuating circumstances that can facilitate the early release of superannuation. NATSICC is of the opinion that these regulations have the scope to be more individualised and to take into account a person's health, life expectancy and circumstance.'

Developing an appropriate response to the Aboriginal issue exposes a perennial tension in the sector. Superannuation is a service provided to individual savers. But it is also a system-wide initiative designed, at least in theory, to reduce government spending on the aged.

That means it needs to be matched to individual needs, but consideration also needs to be given to the wider effects on the economy and society. Changing the treatment of Aboriginals will have repercussions in the system.

'This is an issue they are starting to get their heads around, and what needs to be done about it,' says McCarthy. 

David James headshotDavid James has been a business journalist for 25 years and is the author of Managing for the Twenty First Century and The Business Devil's Dictionary. He has a PhD in English Literature from Monash University. 

Topic tags: David James, Catholic Super, superannuation, Close the Gap



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Existing comments

In any discussion about improving Indigenous peoples' access to super, it would be important to determine whose voice is being privileged - bureaucrats or the people most affected. I can't help but ponder about remote Aboriginal communities like Aurukun and Coen, where just surviving is a daily struggle for large sections of the population. Many are struggling with personal issues so profound that even looking for employment, let alone thinking deeply about super, seems a huge goal. A lot of work is being done in this area but progress must seem heartbreakingly slow, at times, to those 'on the ground'.
Pam | 12 December 2012

I recall an undergrad project I was involved with years ago, looking at why Indigenous people didn't apply for their Seniors Cards at the same rate as whitie Australia. Simple, not so many make the age requirement. Plus a few other issues, a lack of wallets carried around so nowhere to stick a card, poor literacy, distrust of public service systems and public servant communication styles and on and on. Why should super be any different? Anyway, super for most is a rip-off, we could all do with early access, since the so-called managers seem to lose more money than they ever make theses days, while their salaries go up along with bonuses and perks.
janice wallace | 12 December 2012

In Australia we have massive problem with our current Superannuation Industry. Massive “administration fees” and other costs usually fully eat up smaller contributions. If somebody works for a few organisations and is only earning a little, the Superannuation fund hardly growth. Most of these Superannuation funds are also exposed to the share market and in many cases actually manage to lose considerable parts of peoples savings. What we need in Australia is system similar to Switzerland and other countries. In these countries we have a so called 3-pillar system to care for peoples retirement. The first pillar is a Government run Superannuation scheme, which is funded by mandatory contributions from employers and employees. It does not matter how many times people change jobs, their contributions are safe and secure and everyone is guaranteed a minimum pension. The fund is also receiving fund from alcohol and tobacco taxes. The first pillar (Government Superannuation scheme) means than pensions do not need to be funded from taxes and taxes can remain lower. The second pillar is similar to the private Superannuation system in Australia and it provides some extra money for people in retirement. The idea is that at retirement people have more leisure time and greater health costs and therefore may need more money. The third pillar are private savings and real estate. We need a Superannuation reform which embraces all Australians and provides for better security and fairness for all.
Beat Odermatt | 12 December 2012

Indigenous people living in remote areas, some 100,000, and the severely mentally ill, some 600,000, are Autralia's most vulnerable and neglected citizens; large federal funding is given, and woefully ill applied, to both groups. The result is that their life expectancies are a low 56-60 years, one third fewer than we see as our right. In some northern remote areas Australia heads the GLOBAL statistics for youth suicides...the double whammy of indigenous poverty and mental ill health. Whatever can be done to improve this situation should be done ASAP. Thank you, David.
Caroline Storm | 12 December 2012

This is not the only issue with Indigenous superannuation. However, I put exactly the same argument to the High Court in 2011 questioning the age of release given the ABS stats on life expectancy and also because under the Superannuation Regs 2004 ABSTUDY recipients are neither included nor excluded under the regulations - which excludes a lot of Indigenous people who may face severe financial hardship whilst they are studying from claiming early release of super funds. If you receive CDEP however, you are eligible for early release but if you make and effort and undertake a Masters or PhD you are not? The High Court's response? Not accepted - dismissed....Don't want to deal with it... Most Indigenous families would be classified (using the Government and Centrelink standard definition of SFH) as living day to day, week to week in SFH yet they are unable to access Super funds that could make the difference between housing and no-housing. My wife and I raised the argument that this breaches the racial discrimination act and is realistically another form of "stolen wages". Abstudy and the Commonwealth Ombudsman's office agreed with us and supported the argument. While we are on the issue the majority of Indigenous Australians would also rent their home and do not own their home (statistics support this). Here they are further excluded because under superannuation regulations mortgagees CAN get relief at times of SFH and make an applications for emergency release of funds. However, people who rent can not (also an issue many non-Indigenous families are experiencing). The end result of not being able to pay the rent is the same as not being able to pay the mortgage - HOMELESSNESS.... and for many Indigenous families a reality that makes them walk the street.... However, the reality of actually getting these issues addressed is ridiculous and the ignorance of those who are not forced to endure constant SFH excludes those who need the assistance the most...
Simon Dorante-Day | 12 December 2012

Poverty does not discriminate. We have poor and rich people from all different background. What we need to do is to remove poverty traps and provide incentives for everyone to become self reliant. The current Superannuation schemes are getting paid commissions if they lose or make money for their investors. These funds are not suitable as a backbone for a good social security system. I have seen Superannuation funds (even so-called) industry fund taking every cent from some investors in form of an “administration fee”. The Superannuation system needs to be fixed for all.
Beat Odermatt | 13 December 2012


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