Superannuation and Why Don't We Save.

The topic permanently in the news is the looming rise in the cost of superannuation. 

If the compulsory superannuation scheme hadn't been abolished by Robert Muldoon in the mid-1970s, and indexing contributions to inflation and interest, our personal super accounts would have around 500 billion dollars available to invest.

The Australians have had the current version of compulsory super since 1992, and there is somewhere between 3 and 4 trillion dollars in those funds that has been used to underpin both Australia's growth and a dignified retirement for many.

New Zealanders also take on a lot of household debt for mortgages, goods like vehicles, education and the like.

To get people to save more for their retirement would need enough income to have the money to save meaningful amounts - as well the incentive to do it. Things that might help - 

• Improvements in productivity to underpin pay rises that could be captured as savings rather than consumption. Productivity improvement would also control cost escalation, but our productivity is going backwards.
• Changing our culture of easy debt that's underpinned by the idea that property price growth will be endless and speculation will remain tax-free: we've got to stop real estate trading being our main economic activity and shift the money in to investing in productive endeavours to give wage growth.
• Give incentives to save: shift to the tax-reduced model to accelerate savings growth and tax them on exit. The Australians and many others do this and the results speak for themselves.