Sustainability and Performance of Super Funds

The recent article titled "Boomers Don't Have Enough Super" revisits a familiar topic that frequently surfaces in politics and media. Unfortunately, it offers little more than a rehash of outdated discussions without making any meaningful effort to overhaul the obsolete system that continues to deepen the financial struggles of already vulnerable demographics in Australia.

We already recognize that we lack sufficient resources and have moved beyond mere discussions; we are prepared for action. However, "action" necessitates a substantial minimum mass, and therein lies the challenge!

Our mandatory super scheme at its best with bird's eye view:

Disparity Among Demographics: A glaring issue within the superannuation system is the disparity in retirement savings among different demographic groups. Australians from non-English speaking backgrounds face a significant disadvantage, averaging $140,000 less in superannuation at retirement compared to their English-speaking counterparts. This disparity stems from various factors, including over-representation in the gig economy, which complicates their ability to contribute consistently to superannuation. For instance, men over 55 from these backgrounds have an average balance of $315,000 compared to a national average of $420,000, and women fare even worse, highlighting a critical gap that needs addressing.

Impact of the Gig Economy: The rise of gig economy jobs presents a complex challenge for the superannuation system. Many gig workers are classified as self-employed and thus are responsible for their own super contributions, often leading to inconsistent or inadequate savings. This self-managed approach can result in a lack of awareness about employer obligations or simply the omission of super contributions altogether. Calls for reform, such as requiring companies like Uber, DiDi and DoorDash to contribute to super for their workers, underscore the need for systemic changes to protect these workers' future financial security.

Sustainability and Performance of Super Funds: Despite a recent rebound in investment returns, with average returns reaching 8.62% in FY23, the sustainability of super funds remains a concern. While strong inflows and investment performance have increased average balances, from $90,783 to $97,154, the pressure to maintain competitive fees without stifling innovation and transformation is immense. This is crucial as funds aim to attract and retain members amidst regulatory reforms. Super funds must balance delivering strong returns with providing affordable financial products and advice to ensure long-term member satisfaction and retention

Our mandatory super scheme at micro level from my perspective:

In 2017, I entered the hospitality industry through the acquisition of a pizza shop under management. I sold the underlying asset, "the shop," and deregistered the company that owned it in 2019. During this time, I gained a deep understanding of the thin profit margins and intense competition within the hospitality sector, as well as the unacceptably low industry awards. I also discovered that international students that made most of my workforce, the most vulnerable demographic part taking in the workforce, were subjected to mandatory superannuation contributions through their award schemes.

These students encountered significant challenges in balancing their academic commitments with part-time jobs. By contributing to Australia’s mandatory superannuation, they were effectively sacrificing a portion of their earnings that could have provided essential nutrition, such as a simple slice of bread, necessary to attend classes or take exams.

For this demographic, contributing to a retirement fund seemed irrelevant, as they had no plans to retire or live in Australia. The contribution amounts were so minimal, given their low wages, that their superannuation portfolios did not qualify for standard benefits like life insurance, income protection, or total permanent disability insurance.

Moreover, by the time they would be eligible to access these funds at or over the age 65, their savings would likely have diminished significantly due to inflation and administrative and account keeping fees funds imposed, rendering the funds worthless.

Calling for Superfund Reforms

The disparity between the meager benefits received by the contributors and the substantial salaries drawn by fund managers from these contributions raises questions about the fairness and efficacy of the system.

Fund managers thrive on the fees collected from managing these portfolios, yet the contributors, especially vulnerable groups like international students, see little in return for their mandatory sacrifices.

This situation calls for a re-evaluation of how superannuation is applied to transient and vulnerable workers in sectors like hospitality. Potential reforms could include exemptions for international students or alternative savings schemes that offer immediate financial flexibility rather than distant retirement benefits. Such changes would better align with the students' needs and realities, ensuring that they are not unfairly burdened by a system designed for long-term residents.

Addressing these issues is crucial not only for the welfare of international students but also for the broader health of the hospitality industry. By creating a more equitable and sensible framework for superannuation contributions, Australia can ensure that its hospitality sector remains attractive and viable for the international students who are essential to its workforce.

Needless to say, I myself do not enough super to retire whilst holding lucrative corporate jobs. Should I say more?

Your thoughts on the matter?

Truly Yours,

Narghiza Ergashova

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Narghiza Ergashova is a highly skilled finance executive based in Australia with extensive experience across industries like property, mining, chemicals, and infrastructure. She is recognized for her expertise in managing complex portfolios, building strong stakeholder relationships, and driving exceptional business performance.

As a thought leader, Narghiza regularly shares valuable insights on leadership, innovation, and personal growth. Through her Medium articles, she covers key topics such as employee engagement, effective leadership strategies, and overcoming business challenges. Her work resonates with professionals looking for actionable advice and inspiration to succeed in both their careers and personal lives.

To learn more about Narghiza Ergashova, you can explore her work on the Blogger, STCK.com or visit her Medium.com profile. Discover her expert insights and strategies for leadership, business growth, and navigating challenges in today’s fast-paced industries.

In May 2025 Narghiza Ergashova released her debut autobiography called Curly Clix Convictions . The book delves into Narghiza's journey as a professional, entrepreneur, and wife and a mother. You can visit her biography by clicking the link below.