There is no pleasing some people

This is becoming tiresome. More opinion presented as research. In this case, the Financial Services Council of Australia has released its latest piece on superannuation in Australia. The FSC finds that Australians are not spending their superannuation quickly enough and this is ‘not optimal.’

The FSC contracted NMG Consulting to conduct the “research”. It is patently ridiculous to interpret the results of “modelling” as if they were facts. Here is an extract from the FSC media release:
“…retirees, who as the FSC research shows, are currently drawing down 17% less income …than an optimal system could achieve.” NMG also were able to determine that total assets in the system would be $1.6 trillion lower by 2060 if their concocted ideas were introduced.

My goodness, do the juniors writing this gumpf not know that the Australian system is a defined contribution system that specifies an input but leaves the output to the individual members? Do they not know that compulsory superannuation was started as a trade off for less wage increases?

That NMG and the FSC make up a model, add in a bunch of assumptions, look at what spits out at the end and call it research is just silly. It is merely a model of assumptions. Secondly, that they pretend to know what is “optimal” is ludicrous. In our system, the individuals decide how much to withdraw and when. Only the individual knows what is optimal in their circumstances. Nobody at NMG or the FSC knows what an optimal rate of drawdown is. They can pretend to know, but that’s all it is: pretence. Do they also pretend to know the optimal rate of spending your wages? If they know what is optimal for super spending why not wages, too?

Not many years ago, many retirees were criticised by the so-called experts and handwringers for splurging their superannuation on world cruises, holidays and then drawing the public funded age pension. Now it seems they are being criticised for not spending enough. It would surely be understandable if retirees en masse told the FSC and NMG types to play in the corner with their models if they want to, but they will need to do better if they want to influence public policy.

The model is not reality