Retirement
Compulsory super has ‘failed Australians’
The superannuation system has failed the Australian workers it is intended to serve, according to Peter Costello, who has called out a major flaw of the system while considering the need for reform to the sector.
Compulsory super has ‘failed Australians’
The superannuation system has failed the Australian workers it is intended to serve, according to Peter Costello, who has called out a major flaw of the system while considering the need for reform to the sector.
Speaking at the Citi annual investment conference, the former commonwealth treasurer said the major mistake that was made on introduction of a compulsory superannuation system in Australia was that everybody thought about putting the money in “but there wasn’t a lot of thought given to how it would be managed once it was in these funds and how it would come out”.
After nearly 30 years of use, Mr Costello said, “We realise [now] that fees were extraordinarily high, some of the products were no good, and at the end of all this, when you get your entitlement, there’s still this huge gap as to ‘what do I do now?’”
The former treasurer flagged that for anyone with sizeable sums in a superannuation fund who is looking to retire, if they decide to take out the lump sum, they have to invest it all over again.
“You’re at that stage of your life where you are trying to wind down and you don’t really know what to do with it, and I think this is where we’ve failed Australians.”
“We haven’t had the right exit products, we haven’t had the ability to move between funds as easily as we should have and we haven’t had fees as low as they should be,” he said.
Mr Costello said he has advocated for a government default fund, but he isn’t sure whether it’s something that the current government would consider.
A government default fund, he explained, “would be a catch-all fund for people who don’t choose to join another superannuation fund, which could provide a basic investment product at very low rates”.
“Now whether that’s of appeal to the government or not, I don’t know – but there are a lot of people out there that are falling between the cracks, a lot of people out there who have multiple funds, [and] a lot of people out there that are paying a lot more in fees than they should be paying.”
RELATED ARTICLES
About the author
About the author
Superannuation
Rest strengthens investment strategy with seasoned executive appointment
In a strategic move to bolster its investment strategy, Rest, one of Australia's largest profit-to-member superannuation funds, has appointed Andy Moser as the Head of CIO Office. This newly created ...Read more
Superannuation
NGS Super strengthens leadership with appointment of new Chief Member Officer
In a strategic move to bolster its member growth and experience transformation, NGS Super has appointed Adam Parsons as the new Chief Member Officer (CMO). Effective from 1 June 2026, Parsons will ...Read more
Superannuation
Aware Super triumphs at Chant West Super Fund Awards with top honours
In a significant achievement for Aware Super, the fund has clinched top honours at the Chant West Super Fund Awards, securing both the Super Fund of the Year and Pension Fund of the Year titlesRead more
Superannuation
NGS Super rolls out enhanced member advice services with a focus on accessibility
In a significant move to make financial advice more accessible, NGS Super has unveiled an enhanced suite of member advice services, featuring a new digital advice platform. This initiative aims to ...Read more
Superannuation
US data centre investment highlights the benefits of decarbonisation and digitalisation
In a compelling demonstration of the global shift towards decarbonisation and digitalisation, Rest, one of Australia's largest profit-to-member superannuation funds, has underscored the value created ...Read more
Superannuation
Aware Super bolsters support for financial advisers amid growing partnerships
In a strategic move to enhance its growth trajectory, Aware Super has announced a significant investment in bolstering support for financial advisers, aiming to deliver superior retirement outcomes ...Read more
Superannuation
TelstraSuper and Aware Super merge, creating a powerhouse with over $235 billion in funds
In a strategic move that underscores the growing trend of consolidation in the superannuation industry, TelstraSuper and Aware Super have successfully completed their merger, creating a formidable ...Read more
Superannuation
Parliamentary support heralds a fairer superannuation system for under-18s
In a significant development for Australia's superannuation landscape, Rest, one of the nation's largest profit-to-member super funds, has praised the recent cross-parliamentary support for extending ...Read more
Superannuation
Rest strengthens investment strategy with seasoned executive appointment
In a strategic move to bolster its investment strategy, Rest, one of Australia's largest profit-to-member superannuation funds, has appointed Andy Moser as the Head of CIO Office. This newly created ...Read more
Superannuation
NGS Super strengthens leadership with appointment of new Chief Member Officer
In a strategic move to bolster its member growth and experience transformation, NGS Super has appointed Adam Parsons as the new Chief Member Officer (CMO). Effective from 1 June 2026, Parsons will ...Read more
Superannuation
Aware Super triumphs at Chant West Super Fund Awards with top honours
In a significant achievement for Aware Super, the fund has clinched top honours at the Chant West Super Fund Awards, securing both the Super Fund of the Year and Pension Fund of the Year titlesRead more
Superannuation
NGS Super rolls out enhanced member advice services with a focus on accessibility
In a significant move to make financial advice more accessible, NGS Super has unveiled an enhanced suite of member advice services, featuring a new digital advice platform. This initiative aims to ...Read more
Superannuation
US data centre investment highlights the benefits of decarbonisation and digitalisation
In a compelling demonstration of the global shift towards decarbonisation and digitalisation, Rest, one of Australia's largest profit-to-member superannuation funds, has underscored the value created ...Read more
Superannuation
Aware Super bolsters support for financial advisers amid growing partnerships
In a strategic move to enhance its growth trajectory, Aware Super has announced a significant investment in bolstering support for financial advisers, aiming to deliver superior retirement outcomes ...Read more
Superannuation
TelstraSuper and Aware Super merge, creating a powerhouse with over $235 billion in funds
In a strategic move that underscores the growing trend of consolidation in the superannuation industry, TelstraSuper and Aware Super have successfully completed their merger, creating a formidable ...Read more
Superannuation
Parliamentary support heralds a fairer superannuation system for under-18s
In a significant development for Australia's superannuation landscape, Rest, one of the nation's largest profit-to-member super funds, has praised the recent cross-parliamentary support for extending ...Read more
