More than 170,000 Australians could end up losing around $500,000 in savings by the time they retire, as a result of leaving their money in poor-performing super funds.
Super Consumers Australia (SCA) has released research that shows how more than 176,000 new accounts were created in 2017-18 for MySuper products in the bottom 25 per cent of performers.
These new accounts are part of more than one million total accounts “already held in these bottom-of-the-barrel MySuper products”.
“These superannuation laggards continue to attract tens of thousands of new members each year through a badly designed default system. Our superannuation system is an “unlucky lottery” for too many Australians.” said SCA acting director Xavier O’Halloran in a statement.
“What’s worse is that we know the industry is resisting changes which would ensure people end up in better performing products.
“The Productivity Commission proposed a suite of options, including ‘best in show’, which would have the immediate effect of stopping more people’s retirement savings ending up with products that would cost them in retirement.”
Mr O’Halloran has urged the Government to take action on ending the creation of duplicate accounts, and ensuring people are only defaulted into the best performing products.
“Our super system 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.
“We need the regulators to take real action to weed out these laggards, but we acknowledge that this will take time. The regulator’s job will be made much easier if we stop growing underperforming products through a poorly designed default system,” said Mr O’Halloran.
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