Super to be simpler for new employees

The West Australian, 29 March 2017

The days of workers holding multiple superannuation funds gobbling up their retirement nest eggs with unnecessary fees might be over under plans from the Productivity Commission to simplify the super system.

But individuals might have to give up control of their superannuation choices to their employers right at the start of their careers as the commission attempts to boost the returns on retirement savings.

The commission is looking at ways to reduce the complexity that workers face when they start employment while boosting long-term returns. It comes after complaints about people holding multiple super accounts losing track of investments.

The commission’s deputy chairwoman Karen Chester said the aim was to help people who failed to make a choice about their super funds end up in a system that delivers better long-term returns and lower fees.

“Our new models can make default super simpler and easier to compare, and offer the prospect of lower fees and better performing products,” she said.

When a person enters the workforce they would go into a default scheme and stick with that fund unless they voluntarily moved their savings.

The commission has proposed four ways to overhaul how people end up in a default fund.

Under one proposal, a worker would make their own choice from a non-mandatory short list of four to 10 potential funds.

A second idea has employers choosing the default fund.

Two other proposals would result in funds in competition with one other offering default products, with a government-appointed body picking the best five that would go to workers.

The commission says the core problem with super is the complexity for those who often have little immediate interest in their retirement earnings.