Australians could be $500k richer in retirement under proposed super shake-up

Marco Green
January 10, 2019

Poorly performing and high-cost superannuation funds are ripping about $3.8 billion a year from the retirement savings of Australian workers and retirees.

The Productivity Commission is also sticking by a contentious proposal unveiled a year ago for a panel of top bureaucrats and Federal appointees to select a list of up to 10 "best in show" funds that should be the default choice for new employees.

Australians could reportedly retire with an extra $500,000 in superannuation if the federal government adopts the recommendations of a report into the $2.8tn sector.

Revoking the licences of superannuation funds that persistently underperform is among advice in the Productivity Commission's report, tabled in parliament on Thursday.

"Because what the report did find is that right now it is a lottery for members as to the quality of the funds".

For a person starting their first job now and retiring in 2064, the commission believes the changes could give them up to $533,000 more when they retire.

The treasurer, Josh Frydenberg, said the report showed the superannuation system was serving the nation reasonably well but there were "significant issues to address".

The government will not make its final response to the report until it's received the final findings of the banking royal commission in February, which looked at the conduct of super funds and how they're regulated.

One flaw which Mr Frydenberg wants to see addressed is an "underperformance of a number of superannuation funds, which is a result of a lack of effective competition", but he noted numerous Government's superannuation reforms that are now before the Parliament were endorsed.

"I'm not interested in the politics of the superannuation industry".

The report attributed the shortfall to "asset selection" differences, alongside conflict of interests in big finance companies - code for highly paid fund managers tipping member money into dud stocks spruiked by the company's broking arm.

He said the report supported numerous government's proposed changes to superannuation now before parliament and urged Labor to back them.

Shadow treasurer Chris Bowen is also concerned about the best-in-show list, saying it needs to be looked at further.

On the government's already-proposed changes, Mr Bowen said Labor was ready to negotiate past year but legislation wasn't put to a vote in the Senate.

'Today's report is a clarion call for political parties of all persuasions to fix this outdated system, ' the group's chief executive Alan Kirkland said.

'Structural flaws - unintended multiple accounts and entrenched underperformers - are harming millions of members, and regressively so'.

Other reports by Click Lancashire

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