Home / News / Why super ‘isn’t fit for purpose’ for First Nations Australians

Nearly every Australian has super, but its settings don’t work for every Australian, according to the First Nations Foundation, which is advocating for changes around estate planning and the preservation age to make the system fairer.

Australia’s superannuation system is internationally recognised as one of the best designed pension systems in the world. But not every Australian can benefit from it in the same way.

That’s according to Phil Usher, CEO of Indigenous financial wellbeing provider First Nations Foundation (FNF), who says that super’s current settings are major obstacle to First Nations Australians engaging with it – and ultimately having a fulfilling retirement.

“The superannuation system is really good; it’s touted as one of the best in the world,” Usher tells ISN. “But there’s some systemic issues that make it not fit for purpose for First Nations people.”

The first is the preservation age – 60-65. The life expectancy for First Nations Australians is around 71 – the average Australian life expectancy is 83 – and it’s “really hard to get them excited about (super)” when they have relatively little time to use it, and a larger list of medical and living expenses to use it on.

“It’d be like telling the rest of Australia that they can’t access their super until 75,” Usher says. “You can imagine how that would go down and how disengaged the broader population would be.

“During Covid we did a snap survey of people who’d done our training, and 40 per cent said they’d accessed the full $20,000 from early release, on the premise that they didn’t think they would access it at all. Any time there’s an opportunity for First Nations people to access super they try and do it, because they think that’s the only opportunity they’ll get.”

Then there’s estate planning. Updating a binding nomination every few years is a “painful piece of policy” – for everybody – while the kinship structures of First Nations Australians means allocating superannuation to the right person can be difficult.

“There’s a lot of complexities that don’t gel well with First Nations people,” Usher says. “One of the examples community use is that if you have a sister who can’t have a baby, you might have a baby yourself and give it to them and they raise it. When it comes to leaving superannuation or estate planning, (the questions are) were they a dependent, were they blood, what other claims can people make?

“It gets a little bit messy. It’s really transient too; because there’s that village mentality, you might have somebody staying with you who isn’t related but they become a dependent. You might have adult children who are blood and related but this person who’s been staying with you for the last three years is entitled to it. It’s the fluid nature of the family structure that gets caught up in it.”

FNF is working with Treasury to work out the different issues created by kinship structures and by the complexities of estate planning generally. They also want to open up the conversation around changing the preservation age for First Nations Australians. The best way to do that is to make it postcode based, Usher says; if you let First Nations people access super early, then “I think our population is going to increase significantly”, while a super fund won’t want to determine who is and who isn’t Aboriginal.

Under FNF’s proposed system, the government would identify regional and remote communities with lower life expectancies and allow everybody who’d lived there for a certain amount of time to access their superannuation at an early date

“Otherwise it becomes a race-based policy, which never goes too well,” Usher says. “We’ve talked to a few of the individual funds and they’re very supportive of doing a nationwide engagement, going to some of these places with lower life expectancy and asking them what they want and what access can mean to them, to get a voice from community around how super could work.”