Australia's first super fund was established in 1862 for the employees of the Bank of New South Wales (now Westpac), and this was soon followed-up in 1869 by the AMP establishing a fund for its staff. Since then the super savings pool has grown to $950 billion and is well on its way to becoming the biggest investment pool Australia will ever see.
By Alex Dunnin

KEY POINTS
Super started in 1862, has already grown to $950 billion, and is projected to reach $3 trillion in a decade. Retiring baby-boomers will expect more in retirement than any previous generation of retirees and super is how we will pay for this. It all started with award super in the 1980s.

Australians are getting older. We are living longer and are having fewer children. The problem is that as we are getting older there will be fewer taxpayers to pay the taxes that will fund our aged pensions. The problem is so extreme that the government forecasts that by the end of the next 50 years we will have just three taxpayers supporting each retiree compared to eight taxpayers per retiree today.

To help pay for us in our greying years, the Government has been trying to encourage us to save for our retirement through superannuation. To make this happen, the government has put into place the modern superannuation system designed to encourage us to save for our retirement. It has two main aspects.
First, by making superannuation contributions by employers compulsory. And second, by offering tax concessions on our contributions as well as tax concessions on our super fund earnings to help our savings grow more quickly. The compulsory component of superannuation, called the Superannuation Guarantee, now stands at 9 per cent of our annual incomes.

Superannuation currently applies to more than 95 per cent of Australia’s workforce. However, given the ‘far off’ nature of our retirement and the fact that Australian’s are historically poor savers, most Australian’s are still ill-prepared for funding their retirement years.

Making this challenge ever more daunting, Australia is more than ever comprised of educated and active ‘now-consumers’ personified by the babyboomer generations now approaching retirement. Without doubt they will want a higher standard of living and a more sophisticated lifestyle in their retirement than any retiring generation that has gone before them and this will have to be paid for by someone. And this is why the Government is so committed to superannuation.

Super is also important to just about every employer as nearly a tenth of their payroll goes into super each year. For some generous employers, these super contributions are even more super. Little wonder we all talk about super so much even though we claim to be so disinterested.

Growing out of all these incentives, the modern superannuation industry is significant – in fact it usually doubles every five years and on current estimates is projected by Rainmaker Information to climb to $3 trillion within a decade. Super is fast becoming the biggest savings pool Australia has ever seen.

Super has however changed significantly since its early days when private pensions were paid only to senior, long serving – usually male- permanent staff in large private companies and Government departments. In those days superannuation was predominantly held by white-collar males and superannuation funds were mostly defined benefit funds, meaning your retirement benefit was determined by your age, how long you were with the same employer and what your final salary was. In other words it was an old-boys club.

All that however changed in the 1980s. In 1986 as part of the National Wage Case, the Government supported the ACTU in its claim before the Arbitration Commission for a 3 per cent productivity payment to be paid to all Australian Workers in the form of Award Superannuation. This was the spur that saw superannuation broadened to include many millions more workers. The old-boys club was at last broken.

Super is now a major feature of most awards, even though this may change eventually under Work Choices. Nonetheless, award superannuation challenged the notion that superannuation was a benefit only for the privileged few. Its impact was in fact so great that the proportion of the workforce with super increased from less than 40 per cent up to 90 per cent in just a few short years. This was the beginning of superannuation in Australia as we know it today.

Superannuation - the story so far
1860s	Superannuation began in Australia.
1890	State Pension Scheme introduced.
1909	Commonwealth Pension Scheme (Aged Pension).
1950s	Super restricted to permanent male executives.
1960s	Tax concessions for the self-employed.
Late 1970s	First industry fund introduced.
Early 1980s	Start of productivity bonuses in awards spurs emergence of more industry funds. 1987 Arbitration Commission supports Award Super.
1991	Superannuation Guarantee legislation becomes law.
Early 1990s	Member Investment Choice introduced.
1996	Government proposes super fund members be given the right to choose which super fund they should join.
2000s	Compliance overload prompts many employers to outsource their in-house corporate super funds to either master trusts or industry funds.
2003	Introduction of Financial Sector Reform Act.
2004	Trustee licensing introduced, disclosure rules toughened. Choice of super fund legislation passed.
2005	Super choice comes into effect 1 July.
2006	Super choice extended to cover state awards.

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