Imagine being able to buy shares in the Tax Office, one privatisation I notice that isn't on the national agenda.

Just think, no risk and all upside.

The next best thing would have to be the shares in the companies that get our super since, like tax, the payments are compulsory. As I said, no risk and all upside.

You'd be making money out of everybody else's super payments. Suckers.

Who knows, super shares might even be better than super itself since you could sell them any time and get your money whenever you want, plus there's a 30 per cent tax credit if they're franked.

Not only do fund managers and advisers have a captive market in compulsory super, valued at some $1 trillion and growing every year, there are rising wages and high employment - but voluntary contributions are set to soar.

After all, super is about to become the best tax dodge around. Er, legally I mean.

The story so far

To see what I mean, check out what happens after July if you're 60 or over.

No more tax from the day you start drawing down your super, not even on lump sums.

What's more, you can keep your money in the super system as long as you like to make sure it's never taxed again.

And you can add more to super when you're retired, except for the over-65s, who will have to be working a minimum number of hours, converting income from being taxable to tax free.

Even that spare $1 million you were wondering what to do with is allowed to go into super before July 1 when the new ceiling takes effect, ensuring it becomes tax-free forever after, except for the 15 per cent tax on any income it earns before you take it out again at 60 or over.

If you're under 60, there's salary sacrificing as well, where you get your boss to pay some of your earnings into your super fund instead of to you.

This can pull down your tax rate from as high as 46.5 per cent in the top income bracket to just 15 per cent.

And once in super, the earnings are also taxed at 15 per cent instead of your marginal tax rate until you draw it down at the other end.

I could go on, but I gather you have things to do.

Suffice to say, putting money into super is, in most cases, better than investing it anywhere else, unless you're on to something we don't know about, including negative gearing.

Amazingly, super can even beat paying off a mortgage which has, say, 10 years left to run.

That's because more money is going into super than on the mortgage thanks to the differences in tax. With salary sacrificing 85 cents of every dollar you earn goes into super, compared with only 53.5 cents available to pour into the mortgage if you're on the top bracket.

It's even been suggested that you're better off making your mortgage an interest-only loan, and using the extra cash to live off as you salary sacrifice more into super.

This should be done only under adult supervision.

Anyway the point is that super has become unbeatable for a tax-effective return, so there's going to be a mountain of money there for the taking by fund managers.

Taking stock

And guess what? Apart from industry super funds, the biggest fund managers are listed banks and financial stocks.

Advance, AMP, AXA, BT, Colonial, MLC and Perpetual all have listed parents.

As you can see from the table, the leading listed fund managers happen to have a chain of financial advisers as well. Super might have become the best tax break around but it sure isn't the simplest.

You might not consult an adviser about whether to buy an investment property, but you probably will when it comes to super.

Especially if you're over 55 and so are allowed to work as well as draw down some super which, if done the right way, gives more tax breaks than you can poke a stick at.

The table also shows super stock recommendations based on a survey of brokers by CommSec.

But the most super-sensitive stock would have to be AMP, one of the great turnaround stories of the sharemarket.

It's testimony to its underlying strength that the AMP name emerged unsullied from some of the maddest things an Australian company has done. Maddest at the time of writing, that is.

It's come so far that it even returned some capital to shareholders earlier this year.

Not only is funds management a large part of its business, but AMP even benefits from rising interest rates. That's because the returns on the investments of its insurance arm rise from higher revenue from deposits, the money market and bonds - so long as the sharemarket doesn't fall as a result, that is.

Still, AMP remains accident prone. It recently received a wrap over the knuckles from the Australian Securities and Investments Commission over advisers recommending clients switching super funds, although it appears the problem was more about not leaving a detailed enough paper trail.

AMP gets the thumbs up from tipsheet Fat Prophets which says it has 16 per cent of the super market and 12 per cent in managed funds.

"Research company DEXX&R expects the corporate superannuation market to more than double over the next four years and the retail market to grow by about 80 per cent," Fat Prophets says.

"With a leading position in an expanding market, we believe AMP has potential for further growth."

Another super share is Perpetual which has quietly reinvented itself from the old trustee company to an investment powerhouse, boasting one of the most highly regarded Australian share funds.

The trouble is that it doesn't come cheap - the shares are trading about $72 give or take a dollar or two.

Both AMP and Perpetual are trading at price earnings (p/e) ratios above 20 which makes them almost 50 per cent more expensive than the banks. AXA Asia-Pacific is slightly cheaper, though still above the banks.

Bank on it

But relatively less of the banks' business is devoted to funds management, with the ANZ the least involved.

Even so, there's no mistaking the trend. The banks are moving away from interest to fee income and can't get on the super bandwagon fast enough.

St George's wealth management business, for example, grew three times faster than its home lending last year.

Although the profit results of the past two weeks showed that the super and wealth management businesses of all the banks grew strongly, analysts have paid surprisingly little attention to the trend.

On the contrary, there has been some teeth gnashing at the likely rise in bad debts as rates rise, albeit from a historically low level, and how interest margins are falling.

True enough, any investment in bank stocks runs these risks. Which, by the way, have been raised by analysts for at least each of the past three years.

Since Fat Prophets predicted bank shares would tumble by 20 per cent, they must have gone up by at least that.

But as a long-term play, there's no doubt that retirement wealth management is where the future is for the banks.

And probably sooner rather than later.

The booming sharemarket has created a virtuous circle for the super providers.

As super contributions rise, about a third is ploughed directly into the local sharemarket. That pushes the market up, generating a momentum which in turn makes investing voluntary contributions into super more attractive.

Not to mention all those disgruntled property investors who must be wondering about the virtues of negative gearing when they could be salary sacrificing into super at a lower risk and lower tax.

Meanwhile, the increasing returns of the funds mean more fees for super providers.

The beauty of compulsory super for the banks is that it's, well, compulsory.

So even in a market downturn the money still pours in, although the falling return would put a ceiling on fees since the total amount under management would be lower than in a rising market.

In fact, the only way their rivers of super could dry up would be competition from other fund managers, or a large rise in unemployment.

But super is one area where bigger is better since you want to know that where your money is going is backed by a strong institution. Like a bank.

And it's not as if super choice is a threat. There's been no stampede of fund switching and, in any case, many of the competing industry funds are managed by the established fund providers.

DIY double dipping

The beauty of super stocks is the chance to get back some of the fees you've paid to your fund manager as fully franked dividends which bring their own tax breaks.

For DIY super funds, which are taxed at just 15 per cent, it would be adding another link into the virtuous circle of sharemarket, super and fees.

Investing in super stocks would be double dipping - you get all the tax benefits of putting money into super, then you collect more from the dividends, plus a refund.

That's because fully franked shares come with a 30 per cent tax credit, giving DIY super funds excess credits of 15 per cent which are refundable.

And since the super is being invested in super, there can't be much risk.

The biggest dividend paying super stock is Perpetual, with a Telstraesque yield of almost 6 per cent which, after taking the franking credit refund into account, is a yield approaching 10 per cent.

SUPER SHARES
Shares                  ASX code        Fund                    Advisers                        Brokers say
AMP                     AMP     AMP Capital Investors   AMP                     Hold
Aust Wealth Management  AUW     United                  Bridges                         Buy
AXA Asia Pacifi c               AXA     AXA, Generations                AXA, ipac                       Buy
Challenger              CGF     Synergy                         Genesys                         Buy
Commonwealth Bank       CBA     Colonial First State            Colonial                        Hold
Count Financial                 COU                             Count                   Hold
Macquarie Bank          MBL     Macquarie               Macquarie               Buy
NAB                     NAB     MLC                     MLC, Godfrey Pembroke   Hold
Perpetual               PPT     Perpetual               Perpetual               Hold
Promina                         PMN     Tyndall                         Asteron                         Hold
St George               SGB      Advance, Sealcorp              Securitor                       Hold
Westpac                         WBC     BT                      Westpac                         Hold
WHK Group               WHG                             WHK                     Hold