The Productivity Commission has called for an overhaul of the Australian superannuation industry in a draft report, claiming the 30-year-old system was outdated.
Deputy Chair of the Commission, Karen Chester (pictured) released the report, titled Superannuation: Assessing Efficiency and Competitiveness, saying it delivered a “mixed report card”.
“Australia’s $2.6 trillion super system has become an unlucky lottery for many Australian workers and their families,” Ms Chester said.
“The system is working well for many members, but not for all.”
She said the Commission had been tasked to assess the performance of the super system — to determine whether it was meeting the needs of members and retirees and providing the best possible investment returns.
“Too many members are getting subpar returns at a substantial cost to their income and wellbeing in retirement,” Ms Chester said.
“We have had compulsory super for nearly 30 years, but its architecture is outdated … the system suffers from two structural flaws — unintended multiple accounts and entrenched underperformance.”
She said most members were in funds that delivered good investment returns, but millions of Australians were in funds that persistently underperformed — more than one in four funds.
“Over an average member’s working life, being stuck in a poor performing default fund can leave them with almost 40 per cent less to spend in retirement,” Ms Chester said.
Written comments on the draft report, preferably in electronic format, will be accepted by the Commission until 13 July with public hearings to be held in late June.
The Commission’s 570-page draft report can be accessed at this PS News link.
