One Nation’s plan to let Australians redirect part of their super into their pay packets has been quickly attacked as a raid on retirement savings. The Treasurer has gone as far as saying the next election will be a “referendum on super”.
That criticism overlooks an interesting idea underneath the proposal.
Super is deferred wages. It’s money Australians give up today so they’ve got more to spend in retirement. As a society we’ve decided most people will be better off if they’re forced to save part of every pay cheque.
That discipline has worked because millions of Australians will retire with more savings than they would’ve accumulated voluntarily.
However, compulsory saving still has a cost. A dollar directed into super is a dollar that can’t pay the rent, reduce a mortgage or support a family today.
What is One Nation’s superannuation plan?
One Nation has proposed allowing people who rent or have a mortgage to receive 3 per cent of their compulsory super contribution as additional take-home pay for up to three years.
Someone earning $90,500 could receive about $2300 more each year after the 15 per cent super tax. A couple earning $168,000 between them could gain about $4300.
That won’t solve the cost-of-living crisis, but $82 a week could help cover groceries, electricity or part of a mortgage repayment.
What would accessing super early cost in retirement?
Critics point out that people who take the money will have less in retirement. They’re right.
Take a 45-year-old who redirects $2300 a year for three years. If that money earned 8 per cent a year after tax and fees, it could grow to about $35,000 by age 67.
That’s a real cost, but it’s only half the calculation.
Could using super to pay a mortgage make financial sense?
If the $6900 simply funds extra spending, the household has traded future savings for consumption today. But if it reduces a mortgage, the money hasn’t disappeared. It has moved from super into home equity.
Once the full $6900 has been used to reduce a mortgage charging 6 per cent, it saves about $414 a year in interest. For someone paying 30 per cent income tax plus the Medicare levy, it takes about $609 of pre-tax income to pay that $414 bill.
That saving continues while the mortgage remains lower. It’s misleading to compare the smaller future super balance with nothing. The proper comparison includes the extra home equity and interest saved.
When could using super today be worth more than saving it for retirement?
The debate also assumes an extra dollar has the same value at every age. Anyone who has managed their own family finances knows it doesn’t.
An extra $6900 could be enormously valuable to a family falling behind on their mortgage. There’s little comfort in telling them they’ll be wealthier at 67 if they lose their home at 47.
The same logic applies to other debts. Paying down a credit card charging 20 per cent is likely to improve someone’s finances more than keeping the money in super earning 8 per cent.
The opposite situation also exists. Some Australians are already on track for a comfortable retirement. They may own their home and have a substantial super balance. Another dollar locked away may be less useful than money to support their kids or start a business.
Yet our system assumes 12 per cent is right for almost every worker. It doesn’t matter how old they are, how much debt they have or how much they’ve already saved.
That’s a strange conclusion. Super should help Australians fund a comfortable retirement. Its purpose shouldn’t be to accumulate the largest possible balance at the expense of every other financial priority.
What are the risks of greater flexibility with super?
That doesn’t mean there aren’t valid questions around One Nation’s proposal. Extra spending could add to inflation and some of the money could flow into housing and push prices higher. People may underestimate what they’re giving up because they can’t visualise decades of compound growth. Employers may also use a lower contribution rate to disguise weaker pay. Any reform needs to prevent that.
These problems can be managed.
Should Australians be able to choose their super contribution rate?
Keep 12 per cent as the default but allow workers to choose a rate between 9 and 15 per cent, subject to the existing concessional contribution caps.
Most people would stay at 12 per cent because defaults are powerful. We see it in super every day. Members often keep the same fund, investment option and insurance settings for years without touching them.
Those needing more income could elect to receive 3 per cent as tax advantaged salary for several years, possibly more than the three years proposed by One Nation. Those behind on retirement savings could choose 15 per cent. Existing salary sacrifice, catch-up and bring-forward contribution rules could remain.
Workers should have to make the choice once a year. Before reducing their rate, they should be informed of the estimated effect on their retirement savings. Mortgage holders should understand the interest they could save. With both numbers at hand, let the salary earner decide.
Employers would need to disclose total remuneration clearly so the change couldn’t be used to disguise lower pay. The minimum rate could also rise with age. Younger workers often face greater pressure from rent, mortgages and childcare. They’ve also got longer to catch up.
The current debate is framed as a choice between protecting super and letting people raid it. The real question is whether the government should always decide that a dollar will be more useful in retirement than it is today. A sensible default may be 12 per cent but it isn’t a magic number for every Australian at every stage of life.
This article was originally published as an opinion piece for The Australian – Merits of One Nation plan to use retirement super for living costs (07 September 2026).
