LEIGH SALES, PRESENTER: Chances are that unless your retirement is looming you haven't asked yourself in detail how much money you'll need when you stop working.

Most workers automatically have their super deducted and locked away until they reach their 60s and because the money never passes through your hands on its way to your super account, it can also feel like it's not really yours.

For years now there have been serious questions about whether the superannuation system, to which many of us pay scant attention until we really have to, is looking after our money as well as it should.

Retirement income is an issue that will feature heavily in the imminent federal election campaign and so, in the first of a three-part series this week, 7.30's Geoff Thompson looks at the origins of compulsory super and investigates who it's failing.

GEOFF THOMPSON, REPORTER: As we go about our working lives, many of us are too busy and distracted to pay much attention to our superannuation.

FINANCIAL ADVISOR: If they're not in a good performing fund, then they can be condemned to a poorer retirement.

GEOFF THOMPSON: Compulsory super has turned us into a nation of serious savers, collectively investing $2.7 trillion.

PETER COSTELLO, TREASURER (1996-2007): The money is pouring into superannuation. It's pouring in.

GEOFF THOMPSON: That's more than enough to buy all the companies on the Australian stock exchange.

PETER COSTELLO: The question of whether people are getting value for the money that's been pouring in is now on the table and you can see that probably over a couple of decades now they haven't been getting value, or the value they should have.

PROF. SUSAN THORP, SYDNEY UNIVERSITY BUSINESS SCHOOL: This is quite serious in Australia where we have compulsory superannuation which is itself a very complicated structure and involves interacting with risky asset markets and a lot of things that people otherwise wouldn't be thinking about or taking on.

PETER BASTICK: I never really considered life beyond work. I mean, it was always an illusionary sort of ideal that you hoped would occur one day but I didn't give it serious consideration.

I didn't give retirement serious consideration.

GEOFF THOMPSON: Tai chi helped 69-year-old retiree, Peter Bastick, deal with the stress of work and now of retirement.

He started paying superannuation about halfway through his working life as a newspaper journalist and editor.

PETER BASTICK: Certainly equilibrium is something that is very heavily tested.

Superannuation just wasn't on my horizon and for that I'm personally negligent because I'm now living with the consequences of not having a larger nest egg.

JENNIE LYNN: Nice to meet you.

GEOFF THOMPSON: Like many Australians, Peter has always found superannuation confusing and it's a pressing issue now that his health is failing.

Accountant, Jennie Lynn has come over to help him make sense of it.

JENNIE LYNN: Most people would pull all their super out and pay off their mortgage and then live on the aged pension.

PETER BASTICK: Well, I still have an outstanding mortgage which would well and truly eat up not only that but also my other assets.

JENNIE LYNN: Yes, that's the letter there.

GEOFF THOMPSON: Peter's old paper work reveals that when he changed super accounts he was asked to pay a one-off advisor fee of more than $2,500.

JENNIE LYNN: That makes me irate that that's happened.

PETER BASTICK: Well, I have no recollection of meeting an advisor, financial advisor.

JENNIE LYNN: And there's no names of any advisor on any of these forms.

PETER BASTICK: It seems like a huge slug to me.

JENNIE LYNN: Peter's situation is quite typical in that he worked through a period where he wasn't earning superannuation and then went into employers, several employers that paid superannuation but he was never interested in his superannuation. It always just happened.

PETER COSTELLO: The problem in superannuation is this - for most people they don't choose to go in to it. The money is taken out of their wage by law.

They know they can't get hold of it for 20 or 30 or 40 years. They don't feel as if it's theirs. They don't feel as if they own it.

The government concentrated on getting money into superannuation by law but didn't show much interest in what happened to it.

Basically it said now it's someone else's responsibility.

QUENTIN DEMPSTER (Archival): A plan that's either a multibillion-dollar blunder or one of the most far-sighted and progressive policies in our nation's history.

PAUL KEATING (1992): It's a relatively small, affordable, manageable cost which will give Australian workers a decent standard of living in retirement and build a pool of national savings.

BILL KELTY (1989): There are going to be literally billions of dollars spewing forth from superannuation companies every year.

GEOFF THOMPSON: The foundation of Australia's compulsory super system was the accord struck between the Hawke-Keating government and the union movement in the 1980s.

PAUL HOWES, KPMG PARTNER: Like many other significant social reforms of the '80s and the '90s, that grand compact between government employers and the union movement delivered and created the superannuation system.

GEOFF THOMPSON: Workers gave up a demand for a 3 per cent pay rise and put that money into superannuation instead.

PAUL KEATING (Archival): For an adequate and mature level of contribution to be established, I suggest that by the year 2000 we reach a national benchmark where each and every employee has a contribution to superannuation equal to 12 per cent of wage and salary income paid into his or her superannuation account.

GEOFF THOMPSON: Despite determined opposition, compulsory super began in 1992.

JOHN HEWSON (Archival): I ask the Prime Minister why won't you have the decency to admit that your superannuation levy means that workers will either have to take a pay cut or lose their job?

GEOFF THOMPSON: Keating's plan to increase compulsory contributions never eventuated.

The Howard-Costello government later scrapped Labor's deal to deliver tax cuts not as cash, but as increased super.

Paul Keating would say you're partly responsible because he ...

PETER COSTELLO: He blames a lot of people for a lot of things and you know what we did? We just left in place the schedule that had been announced.

PAUL HOWES: I think it capped out at 9 (per cent) but that, by stopping that process, that incremental increase that was meant to occur, it's meant that we've had this unfinished business sitting there with our superannuation system since and that, I think, was a fundamental error of that government and an error that we're still paying for today.

GEOFF THOMPSON: Employers currently contribute 9.5 per cent of workers' wages to super and the rate's not legislated to reach 12 per cent before 2025.

SUSAN THORP: If it were the case that people actually wanted to become entirely independent of the aged pension for example, they would probably need to start contributing to super at a rate of about 18 per cent at the beginning of their working life and contribute at that rate all the way through their working life.

Most of us are, I think, probably realistically not prepared to do that.

PETER COSTELLO: If you truly want to become independent of the government, a self-funded retiree, live off superannuation, you're going to have to put your own money in.

The occupational superannuation is not going to do it.

GEOFF THOMPSON: 42 per cent of Australian retirees still receive the full aged pension.

Since 1997, the proportion of Australians receiving full or partial aged pensions has fallen from 79 (per cent) to 70 per cent.

ROBIN DOUGHERTY: I really thought that I would just keep working and then just one day I would just die but it sort of didn't work out like that.

I didn't expect to be 81 now and still be alive and still needing things, still enjoying shopping, everything like that where you need money.

GEOFF THOMPSON: In her 80s, Robin Dougherty lives in Sydney entirely on the aged pension.

Like many women who took time out of the work force to raise children, she retired with very little super and doesn't own her own home.

PAUL HOWES: The system I think has failed working women and one of the big flaws in the system was not recognising that inequity in the original design of the system.

GEOFF THOMPSON: Retirement was something I didn't even really think about. I'd only been in superannuation for 16 years and I didn't see it, we were never shown anything to tell us that this was really for our future, to keep us going when we retired.

So that's just what happened.

GEOFF THOMPSON: Robin's husband died young, and so when she retired from her job in hospital administration, she moved to Bali to live with her daughter.

Her aged pension was enough to live comfortably there until her deteriorating health brought her back to Australia.

ROBIN DOUGHERTY: I didn't realise I was homeless actually. In my source of looking for somewhere to live, I met a woman from Uniting Care, that's how I got on to them and I told them my story and she said you're homeless and I said, "No, no, I'm not homeless. I have a good bed every night, I have got children that look after me, I'm fed well. I'm not homeless."

She said, "Yes, you are."

GEOFF THOMPSON: Public housing in Sydney's inner west now keeps a roof over Robin's head.

How is your experience different to those you know that were better prepared?

ROBIN DOUGHERTY: I think they're going on more cruises than I'm going on.

I have friends who I've known for years and who did well and they had help over the years. But I enjoyed my life before I got old.

So I'm not at all envious of them, maybe sometimes.

GEOFF THOMPSON: Compulsory superannuation has been phenomenally successful at forcing most Australians to save.

But how that money is invested and the costs that incurs can have a dramatic impact on your retirement income.

PAUL HOWES: At the moment we have a very unique system, a very large system, but it's probably the worst retirement savings system in the world except for all the others and so the system actually does need a lot of refining. It's not perfect and it's got a long way to go.

LEIGH SALES: And I should point out that we invited Paul Keating to join 7.30 for an interview but he declined. It's a standing invitation.

That report from Geoff Thompson and producer Alex McDonald.

In the second part tomorrow they look at the pitfalls of super, highlighted by the banking royal commission . Here is a preview.

RETIREE: I've accumulated about eight super accounts in my working history but I don't have that nest egg because most of it has been chewed up by fees.

FINANCIAL ADVISOR: The duplication of fees and the duplication of insurance premiums could cost in the order of $50,000 for somebody over their full working life.

RETIREE: After them telling me they were there to make me money and I lost $10,000 basically.

GEOFF THOMPSON: How should consistently poor performing funds be dealt with?

PAUL HOWES: With a big stick.