Retired Husband Syndrome, ransacked super funds, and a possible alternative

Japanese marriage laws changed dramatically in 2007 by allowing house-spouses access to their breadwinner’s pension fund. At the time, many media pundits expected this to result in a skyrocketing of divorce rates: that housewives – sickened by the prospect of their Salaryman husbands actually living with them – would opt to take the newly available money and run.[i] The number of unhappy Japanese homemakers, and their loveless marriages, should serve as a warning against making money a cornerstone of a relationship. For doing so may obscure the possibility that the person you are living and breeding with really just wants a patron.


However, maybe they are entitled to a patron – raising children, maintaining a white-picket fence home, and servicing a mortgage do not come cheap. All require both time- and money-rich participants, and often there are strong divisions of labour separating these roles. Furthermore, stay-at-home partners – many of whom have put their own career on hold – are entitled to a kind of profit- and benefit-sharing of the partnership; even should the relationship itself go south.

Yet part of me empathized with the person who felt compelled to engaged in an (admittedly spiteful) binge of prostitutes and gambling, spending much of their $100k in superannuation in the process, rather than let their ex-spouse have any.[ii] Surely the idea that someone is suddenly entitled to half of our superannuation niggles everyone’s sense of just deserve. After all, super is our sacred cow: even the government only taxes voluntary contributions at 15%, yet it turns out that ex-spouses are entitled to tax us at up to 50% on top of that – even if they have no plans to spend their retirement with us (while there is no escaping government).

I would like to suggest an alternative to our model of child and ex-spouse maintenance – one with a certain fantastical, Scott Adams vibe to it, I admit.[iii] This model would bring child and ex-spousal support more in line with taxation, which has the duel benefits of being equitable[iv] and lacking any surprises. Currently, spousal payouts occur from the termination (potentially after a few decades) of the marriage – while our government taxes us on a fortnightly basis. If we were to force couples to ‘budget’ for such a break-up early on, it might avoid a lot of the angst and tension that can arise when they must subsequently divide the goods.

Breadwinners would put their dependents on salary from day one, paying their children’s into a trust fund (for education for instance); parents and spouses would effectively salary package these payments as a portion of their own gross income. In addition, couples would not have separate super funds – instead, they would contribute to a joint super account from the get go. Each could continue to maintain the individual super fund that they had before they married (or began cohabitating) with their partner – yet they could only make new payments to them were the partnership to end.

The government could promote this model as a kind of compulsory ‘divorce insurance’. However, I would favour it over the existing model for the simple reason that it lets everyone know where he or she stands. When we pay our taxes, for instance, we never ‘see’ the money that pays for universal healthcare, roads, and national defence. Yet our legal system continues to encourage the misconception that our wealth – aside from any agreement we have reached with our partners – is not actually ours; that we are not simply its temporary custodians.

The possibility of one’s spouse taking ownership of half of one’s retirement fund, upon separation, would instead be evident from the first post-marriage pay-cheque. Neither husband nor wife would attach themselves as emotionally to their pension or any other assets like Mr Weirs – now in jail for nine months for his super spending spreemeaning that they would likely react with a little less malice.

Just as high taxes can de-incentivize the well-to-do, making couples super-conscious that their money is never exclusively theirs would very possibly de-motivate them to save for their future. This would be disadvantageous for both spouses – regardless of whether they remain until death parts them. Yet, at the very least, it would be more honest.

Image by jcoterhals



Endnotes

[i] While this has not actually happened as predicted, this could be due to the GFC having devastating pension funds.

[ii] It is worth noting that all their children were over 18, so that ongoing child support was not an issue.

[iii] I’ll leave the question of alimony alone, except to suggest that, if the purpose of alimony is in part to compensate people for putting their careers on hold for the sake of their family, then maybe the federal government could provide scholarships for disadvantaged divorcees.

[iv] Like Marx, I believe that the better off should pay more money to support the people and infrastructure of their country, which made their own ascent to wealth possible.
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