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It is not only the Productivity Commission that wants to see greater household engagement in superannuation. As the Commission’s 2018 report makes clear, active consumer choices in super play an important role in driving competitiveness in the sector, which improves sector-wide outcomes. For superannuation funds themselves, successfully persuading households to show more interest in superannuation offers a boost to funds-under-management as households assess their retirement needs and make the additional contributions required to meet their savings goals. For households, active engagement with super promises greater adequacy in retirement income unencumbered by either excessive risk or inferior returns.

But if engaging in super is the key to better retirement incomes, then why do households continue to perform poorly with regards to checking their statements, choosing their investment stream and making voluntary contributions? Established wisdom is that households have little understanding of how the system works and have difficulty prioritising future over present consumption.

These kinds of explanations pay little heed to household attitudes to superannuation. The assumption is that there is widespread support for super, which is unimpeded by the kinds of distributional issues that feature in policy debates. This suggests that households either don’t know or don’t care that large portions of tax concessions on super are captured by the wealthiest households or that women tend to have considerably lower balances than men.

But could perceived fairness be a driver of household disengagement in super? After all, participation tends to be at its lowest amongst those who benefit the least from the superannuation system, such as women, singles and low-income households. Could a sense that the system is failing them explain the lack of participation amongst some households?

The insider-outsider theory offers a precedent by which civic disengagement is driven by a sense amongst disadvantaged groups that the system is stacked against them. The political alienation literature, for example, uses panel and social survey data to show that those who are stuck in low wage and precarious work – ‘labour market outsiders’ – tend to reject mainstream electoral politics by abstaining from voting. This dynamic is captured by political scientists Robert Goodin and John Dryzek’s phrase ‘don’t play if you can’t win’ in their 1980 paper.

Using financial diaries data collected from 41 Australian households over the duration of a year, my research explores the link between outsider status in the superannuation system and disengagement with superannuation savings. Although the sample is small and the findings speculative, the remarkable detail available on the specific economic and social circumstances of each households offers a unique perspective on households’ superannuation behaviour. Specifically, the study is able to develop a measure of ‘outsiderness’ based not only on the superannuation balance of respondents relative to age but indicators like homeownership, household structure and income; forward-looking factors like income trajectory and expected inheritance; and characteristics like caring responsibilities, health status and relationship history.

Insiders and outsiders in the superannuation system

The analysis shows that clear patterns emerge between ‘insider’ households, who are actively engaged in super, and ‘outsider’ households, who are not. Indeed, with often unstable low-to-middle income careers, extensive caring responsibilities and mortgage debt that is unlikely to be reduced by future inheritance, the households that are least likely to check their statements, choose their investment stream and make voluntary contributions are those with the demographic indicators that place them amongst households that tend not to ‘win’ in the superannuation system.

In fact, the study found that these households are often aware of their own disadvantage in the superannuation system. This is especially so amongst female-headed households who are conscious of the lower superannuation balances that they have compared to the men in their lives. Similarly, the study found that uncoupled households, renters and those who will retire with mortgages tend to be familiar with the statistical relationship between singledom, homeownership and elderly poverty.

More specifically, outsider households tend to disagree that “the superannuation system works well for people like me” or that “the superannuation system was designed for people like me”. They also tend to be more concerned than ‘insiders’ about fairness in superannuation, expressing concern about the capacity of the superannuation system to address the needs of women and low-income households and seeing the system as favouring wealthy household.

This all implies that policy debates about distribution in the superannuation system are actually connecting with live concerns that households hold: households do know and do care that tax concessions on super are captured primarily by wealthy households while women, uncoupled households, those on low-incomes and renters all tend to have low super balances and a high statistical incidence of elderly poverty. More specifically, given the dependence of the superannuation system on household engagement, perceptions of fairness may well play a greater role than traditionally thought in delivering the kind of household buy-in that the system needs.


Journal article

Settle, A. (2023) ‘Don’t play if you can’t win’: Household disengagement in the Australian pension system. New Political Economy.



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