Published: Sat, January 12, 2019
Finance | By Loren Pratt

Super changes could boost Australians retirement savings by $500000

Super changes could boost Australians retirement savings by $500000

The Productivity Commission believes reducing multiple super accounts, cutting the impact of insurance fees, increasing competition and getting people into better performing funds would deliver an estimated $3.8bn a year overall.

FIRST-TIME workers could retire with an extra $533,000 by 2064 under a proposed superannuation shake-up to boost returns and get rid of excess fees.

But the superannuation industry is anxious some proposed changes could "undermine the strength" of the nation's retirement savings system.

Untouched super funds with balances under $6000 should be rolled over after 13 months to the Australian Taxation Office, to cut down on fees and charges, the commission recommended.

'This is a landmark report that's been produced by the Productivity Commission and they should be congratulated for it, ' he told reporters in Melbourne on Thursday, adding this was about Australia's 15 million workers.

Beyond that, the commission says employees should be given a list of the 10 best superannuation funds to choose from when they start a new job, as chosen by an independent expert panel.

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".

"We agree with the Commission that there is no place for underperforming funds in the default system, however their proposal for a top ten default list is a blunt mechanism that will be needlessly disruptive and fails to address the more serious problem of underperformance in the wider super system". "I'm interested in the benefits that flow to members".

"The commission's core recommendations relating to default superannuation contributions and the nature of superannuation fund membership would dramatically change Australia's retirement income landscape", ASFA chief executive Martin Fahy said.

Multiple superannuation funds held by people who have changed jobs make up nearly a third of super accounts and cost $2.6 billion a year alone.

"According to the Commission, a quarter of default funds underperform but this proposal would deny 90% of funds default status - it will remove many high-quality funds from the default system which may also disadvantage members in these funds", Ms Scheerlinck said.

Consumer advocacy group Choice said the report is a "clarion call" for lawmakers to fix the outdated system.

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