‘Super lottery’ costing Aussies up to $500k

By Grace Ormsby

September 26 2019
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More than 170,000 people could lose up to $500,000 in savings by the time they reach retirement by being placed in poor-performing super funds in the 2017-18 financial year alone, new research has shown.

“Super lottery” costing Aussies up to $500k

The findings from Super Consumers Australia, the release of which coincided with the advocacy body’s launch yesterday, show that more than 176,000 new accounts were created in 2017-18 for MySuper products in the bottom 25 per cent of performers.

According to the group, these new accounts join more than 1 million total accounts “already held in these bottom of the barrel MySuper products”.

Acting director of Super Consumers Australia Xavier O’Halloran said “these superannuation laggards continue to attract tens of thousands of new members each year through a badly designed default system”.

Calling the superannuation system an “unlucky lottery” for too many people, the acting director said making matters worse is that “we know the industry is resisting changes which would ensure people end up in better-performing products”.

He pointed to the proposal of a suite of options from a three-year study into the superannuation system’s efficiency by the Productivity Commission, including “best in show”, which Mr O’Halloran said “would have the immediate effect of stopping more people’s retirement savings ending up with products that would cost them in retirement”.

The acting director has called for an overhaul to the super system that he said “should default people into products that will leave them well off in retirement”.

“It’s an embarrassment that over 170,000 people are ending up in poor-performing products with funds like BT, Mine Super and WA Local Government Super,” he said.

Super Consumers Australia has said it is urging the federal government to take action on the Productivity Commission and royal commission reports, including through putting an end to the creation of duplicate accounts and ensuring people are only defaulting into the best-performing products.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

About the author

Grace Ormsby

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

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