Retirement
New super scheme could see you retire with an extra $200k
An overhaul of the Australian superannuation system could see Australians retiring up to $190,000 better off, according to a new report.
New super scheme could see you retire with an extra $200k
An overhaul of the Australian superannuation system could see Australians retiring up to $190,000 better off, according to a new report.
Industry Super Australia is the brains behind the overhaul’s proposal, which would require intelligent use of technology to tackle the two most costly drags on the superannuation system: chronic underperformance and multiple accounts.
The organisation said consulting firm KPMG undertook a cost-benefit analysis of the plan, which found the best way to eliminate multiple super accounts and lift performance across the system was to automatically combine a person’s super when changing jobs into a “single quality checked fund”.
According to a statement, the report models two options to implement a royal commission recommendation that a person should only have one default account, with machinery developed to “staple” a person to a single default account.
The model, as recommended by Industry Super Australia, and based off international schemes such as the New Zealand Kiwi Saver Scheme, “would see the money in a worker’s super account follow them from job to job, by automatically rolling over the money into a quality checked single account when they change jobs, unless they choose otherwise”.
Another option, as explained by the statement, would be to allocate a person to a single fund for life, unless they choose otherwise.
In KPMG’s report, it was found that a system of automatic rollover would not only eliminate multiple accounts, it would accelerate the weeding out of underperforming funds from the system sooner, delivering greater returns to workers.
The modelling comes after the Productivity Commission slammed the impact of underperforming funds on individuals reaching retirement age.
Industry Super Australia said that if the Morrison government did choose to adopt and implement the automatic rollover model, workers in underperforming funds would benefit from an extra $416 billion in returns over a 25-year period equivalent to $189,000 per person, or broken down – an extra $7,560 each year.
It was also highlighted that separate from better returns, workers would also benefit from $47.3 billion in savings in fees and premiums, including the impact of recent changes, through the elimination of multiple accounts – nearly $4 billion more than the fund for life option.
The alternate fund for life model was also condemned for the potential for workers to end up “stuck in dud, underperforming funds for many years, and miss out on hundreds of thousands of dollars by the time they reach retirement”.
Commenting on the report’s findings, Industry Super Australia’s acting chief executive, Matthew Linden, said the modelling shows “the huge efficiency gains that can be made through smart policy”.
“ISA’s plan will fix multiple accounts, weed out underperforming funds and, most importantly, deliver more money for workers.”
About the author
About the author
Superannuation
Aware Super takes on Australia's gender retirement gap, aiming for financial equality
Aware Super, one of Australia's largest superannuation funds with a 70 per cent female membership, is on a mission to close the gender gap that sees women retire with 30 per cent less super than men ...Read more
Superannuation
Age Pension increase prompts Australians to review their finances
The increase in the Age Pension, which takes effect today, should serve as a prompt for many older Australians to ensure they're maximizing their income as cost-of-living pressures persist, according ...Read more
Superannuation
Retirement reimagined as Australian optimism meets inflation worries in 2023 super fund insights
The latest reports on retirement confidence among Australians present a spectrum of sentiments, with fresh data revealing surprising optimism in some quarters while exposing underlying concerns in ...Read more
Superannuation
Aussie retirees face a shortfall as ideal retirement nest egg doubles what super will deliver
As Australians look towards retirement, the desired superannuation balance that many believe will ensure a comfortable retirement has significantly outpaced what they are on track to actually save. Read more
Superannuation
Super funds eye 6.5% return in 2023, despite a rocky start
As the year draws closer to its climax, Chant West unveils its projection for super funds in what can only be described as a year of economic ebbs and flows. Read more
Superannuation
A deep dive into Australia’s superannuation system
Australia has a robust retirement savings system known as superannuation designed to provide financial security to Australians in their post-work years. Read more
Superannuation
50,000 super fund members impacted by data breach
Around 50,000 member records were impacted by the breach that took place earlier this month. Read more
Superannuation
Two super funds tipped to reach $1tn by 2040
KPMG has released the findings from a new review. Read more
Superannuation
Aware Super takes on Australia's gender retirement gap, aiming for financial equality
Aware Super, one of Australia's largest superannuation funds with a 70 per cent female membership, is on a mission to close the gender gap that sees women retire with 30 per cent less super than men ...Read more
Superannuation
Age Pension increase prompts Australians to review their finances
The increase in the Age Pension, which takes effect today, should serve as a prompt for many older Australians to ensure they're maximizing their income as cost-of-living pressures persist, according ...Read more
Superannuation
Retirement reimagined as Australian optimism meets inflation worries in 2023 super fund insights
The latest reports on retirement confidence among Australians present a spectrum of sentiments, with fresh data revealing surprising optimism in some quarters while exposing underlying concerns in ...Read more
Superannuation
Aussie retirees face a shortfall as ideal retirement nest egg doubles what super will deliver
As Australians look towards retirement, the desired superannuation balance that many believe will ensure a comfortable retirement has significantly outpaced what they are on track to actually save. Read more
Superannuation
Super funds eye 6.5% return in 2023, despite a rocky start
As the year draws closer to its climax, Chant West unveils its projection for super funds in what can only be described as a year of economic ebbs and flows. Read more
Superannuation
A deep dive into Australia’s superannuation system
Australia has a robust retirement savings system known as superannuation designed to provide financial security to Australians in their post-work years. Read more
Superannuation
50,000 super fund members impacted by data breach
Around 50,000 member records were impacted by the breach that took place earlier this month. Read more
Superannuation
Two super funds tipped to reach $1tn by 2040
KPMG has released the findings from a new review. Read more