Illustration: Dionne Gain. Credit:Dionne Gain For most, their early interactions with Australia's $2 trillion superannuation system go something like this. As a teenager, you land your first part-time job, answering telephones or flipping burgers. Some guy wearing a tie forces you to sign a bunch of paperwork in return for your much anticipated paycheck. Then, every year, as if by magic, you start receiving an A4 envelope – perhaps several – stuffed with a confusing array of statements and disclaimers, something to do with past returns being no indication of future returns. You promptly bin them or, if you're really diligent, place them in folder with all your other "grown up" paperwork. Your early 20s roll around. You land a more permanent, full-time job and spend the rest of the decade working hard and playing hard. Then, some time in your 30s, those letters start to come in with what looks like real money on them, as one did for me this week.

Blimey. I'd better read this thing, you think. Steeling yourself, you start to scan the list of transactions. You see money coming in. Good. You see tax going out - 15 per cent of whatever has gone in. Bummer. But wait, what are these other deductions? Monthly admin fees. Fair enough, perhaps, they are looking after your money. Hang on, what's this? Insurance premiums. I have life insurance through my super? And I've been paying more than $10 a month for it this whole time? Australia's deputy Prime Minister, Barnaby Joyce, last week expressed sympathy with the idea that young, part time and contract workers should not be forced to put aside 9.5 per cent of their measly earnings into super. They should be able to use the money to save for a home instead. But rather than denying vulnerable workers their chance to enjoy the wonders of compound interest and build a retirement nest egg, we should be doing better to protect their hard earned cash once it is in super. First of all, we need to fix the glaring inequity that people on very low incomes actually get a tax penalty for money that goes into super. If they earn less than the tax free threshold, presently $18,200, each year, they actually pay higher tax for each dollar in super (15 cents in the dollar) than otherwise.

Labor introduced a low-income tax offset to correct this unfairness. But in its quest for budget savings, the Abbott government scrapped it. If Joyce wants to help low income earners, he should push to reintroduce it. But, if we really want to bolster the super savings of low income earners and relieve pressure on the age pension, we need to go further. Contrary to popular opinion, Australia's compulsory super system was never intended to replace the age pension but to top it up. But in the process, policy makers, through both inertia and well-intentioned big brotherism, have created a two trillion dollar financial behemoth that is subject to little scrutiny and making a motza charging fees on our savings.

It is time to fix a series of rorts and idiosyncrasies that end up draining super balances by hundreds of thousands of dollars over a lifetime, serving only to feather the nests of the increasingly powerful super industry. For instance, why do we force young people to pay hundreds of dollars a year out of their super as premiums for life insurance? It doesn't take long for a modest sized account to go completely up in smoke this way. In other industries, making it a condition of purchase that a customer also purchase a product from a third party is called "third line forcing" and is illegal under competition laws. According to Alex Dunnin, the head of research at Rainmaker, policy makers bundled life insurance into compulsory super out of concern about underinsurance. "You can't say it's a bad thing, but the tail is sort of wagging the dog," says Dunnin. People may need life insurance, but they should choose when and where to get it.

According to Dunnin, savers are, in fact, entitled to request to have insurance removed from their super. "You can turn it off," he says. But if you do, don't be surprised if your fund pushes back with threats of additional paperwork or that you'll need to undertake a medical exam to requalify for insurance. Plus, do you really want to leave your family starving when you die? The super industry argues that super members get a good deal on bundled life insurance. Super funds sign big wholesale deals with insurers to get a discounted price for members. But a truly liberal government would look seriously at a policy which forces young Australians to pay premiums for insurance most are not aware of and are unlikely to use any time soon. Then again, many financial high fliers make a fortune from the current arrangements and guess which way they vote? Indeed, in addition to paying $7 billion in insurance premiums from their super, Australians fork out $21 billion in fees to the super industry each year. The biggest sting comes for those nearing retirement, thanks to an industry norm of charging fees not as a flat charge, but as a percentage of fund balance.

Quite why managing $100,000 of your money requires 10 times as much effort as managing $10,000 is unclear. That extra keystroke must really be hard work. The Grattan Institute estimates super fees are inflated by at least $4 billion thanks to a simple lack of competition and consumer inertia. It pays to worry a little bit about your super, at any age.