Countless Australians could be missing out on up to $500,000 after being herded into underperforming super funds.
That’s despite the banking royal commission specifically raising the issue.
Consumer group Choice has found that despite both the Hayne banking royal commission and the Productivity Commission (PC) claiming that underperforming funds are trashing Australian retirements, there is still no way for members to identify those funds.
Regulators still don’t collect the right data to allow members to identify poorly performing funds.
“The Productivity Commission described these gaps as yawning; but six months on we are still in the dark about which funds are the 29 ‘serial underperformers’ that are hinted at throughout their report,” Choice said.
“Both the Productivity Commission and royal commission into the banking sector urged Parliament to stop allowing people to be defaulted into terrible funds, or multiple funds. This was pretty much the headline imperative of both.”
But those calls for change have so far gone unanswered, and workers are still being channelled into poor performers without their knowledge.
Speaking to The New Daily, Industry Super Australia (ISA) chief executive Bernie Dean said the problems highlighted by Choice “must be fixed”.
“We have been clear that the government’s first priority must be dealing with the chronic underperformance plaguing some parts of the system that are costing consumers hundreds of thousands of dollars in savings,” Mr Dean said.
“The royal commission and the Productivity Commission have both made it clear where the problems lie – now the government’s focus must be on fixing them.”
More action needed
In addition to underperformance, ISA flagged non-payment and underpayment of super as a $5 billion problem, and called for super contributions to be part of the normal bi-weekly pay cycle.
But Choice said even where employers are not stealing super, “employers have got up to four months to pay super, which means people are forgoing months of extra earnings on their contributions”.
Even fund-reporting to members is a problem area with Choice finding there is no common standard to fund accounting.
“There are no clear requirements or accounting standards for how funds need to report whether their investments are in growth or defensive assets, making it nigh on impossible to compare hundreds of funds and thousands of products,” Choice found.
Parliament has also not agreed on the objective of superannuation. Is the system meant to allow people to have “some” income in retirement? Should the system provide a certain level of comfort in retirement?
“Are we talking chardonnay comfort, or the occasional champagne? Where should limits kick in, and why?” Choice asked.