Ever opened up your superannuation statement and wondered how on earth, after all these years, there's so little cash there? A long time ago, about 10 years after the first compulsory scheme was tentatively introduced, I did just that.
Given hacks don't earn a great deal of money, bonuses are non-existent and pay rises almost as rare, it wasn't too difficult to do the maths on just how much had gone in over the years.
The first batch was at 3 per cent of salary, the next at 6 per cent and the final few years at 9 per cent, which now is the compulsory super level. Surprisingly, the amount in that account pretty much equalled those back-of-the-envelope calculations.
The point was, there didn't seem to be much of a return on investment, if any. Once the tax had been deducted, the charges removed, the fees deducted, the whole thing pretty much was a line-ball affair. And that's from a scheme considered one of the better performers.
It seemed it would have saved everyone a great deal of bother if the cash had simply been paid into a plain old bank account, accessible only when you reach a certain age. True, this was in the mid '90s when the effects of the '87 market crash were still working their way through the system, not to mention the recession of the early '90s.
But it still raised the obvious question: Why do we bother?
It appears to be a question most of us have asked over the years, although to be more accurate, it may well be a question most of us have not even bothered to ask.
For while 9 per cent of everyone's salary is whisked away each week into a big black hole, most Australians just forget about it until they get close to retirement.
A study released this week by the Industry Super Network - representing the not-for-profit super funds - throws up some rather alarming statistics that highlight just how apathetic we've all become about our retirement savings.
All the rules of normal economics, the assumptions about rational behaviour, simply don't apply when it comes to superannuation.
How is this for starters? The more you pay for superannuation, the less you get.
The results from the survey, dubbed Supernomics, show that over a six-year average, funds that charged the highest fees had the worst performance.
Even more disturbingly, up to 4 million Australians who have their money invested in retail superannuation schemes pay several hundred dollars a year in fees for financial advice they never receive. Add all the fees and commissions together, and an average worker could end up losing a year's salary over his or her working life.
And yet, despite legislation in 2005 that allowed switching between funds, only about 3 per cent of Australians bother to change super funds. In fact, most of the switching occurs not because of dissatisfaction but because an employee has changed jobs.
There have been a raft of surveys, including one from the industry regulator, the Australian Prudential Regulatory Authority, that have highlighted the gulf in performance between professionally run retail funds and those run on a not-for-profit basis.
But why do the professionals perform so poorly? Why is there a difference of up to 2 percentage points in annual returns between those run by so-called professionals such as the big banks and those run by the unions?
The answer lies only partly in the fees. True, each time those professionals cream a couple of per cent off the top, they diminish the overall pool and hence the return. But even if they didn't take those fees, there is enough evidence to suggest their investment strategies are fundamentally inferior to those run by unions.
(Talk about ironic. In the immediate lead-up to the introduction of compulsory superannuation in the early '90s, the professionals were up in arms about the irresponsibility of the federal government in allowing socialist union leaders to have their fingers in the national savings pool.)
Professional funds managers are governed by internal rules and mandates that dictate their funds must have a high degree of liquidity.
That means they hold a far greater proportion of shares than the industry funds which tend to be more diversified.
Industry funds hold a large proportion in shares as well. But they are far more likely to invest in other areas such as property and infrastructure - things with a relatively safe yield that tend to perform better over the longer term.
As a result, the professional or retail funds are heavily exposed to the vagaries of the sharemarket.
That showed up in the market crash of 2008. According to the Organisation for Economic Co-operation and Development, Australian super funds on average have about 57 per cent of their cash invested in the sharemarket. That's way above the average 36 per cent of most other developed nations.
In fact, the OECD has warned on several occasions that Australian super funds are over-exposed to the sharemarket. And that's why our national savings pool was savaged when the market went belly-up in 2008-09.
A couple of weeks back, John Brogden, who heads the Investment and Financial Services Association - the body representing the professionally run funds - called on the federal government to increase the compulsory superannuation levy to 12 per cent in order to bridge the gap between our retirement savings and what we'll actually need.
And what a gap - $695 billion as at June 30, 2008. But in his own report,
Brogden revealed investment losses from super funds during 2008-09 caused the national savings gap to widen by a startling $133 billion. For those who were retiring at that time, it was a bitter blow. They had the most to lose and the longest period left in retirement.
It's a good thing the compulsory superannuation levy hadn't been lifted before the market collapse, otherwise our super funds would have lost even more.
So before we talk about increasing the contribution, how about we concentrate on lowering the fees and improving the performance.
