Workers’ windfall

Simpler super worth $25k

WORKERS could add $25,000 to their retirement nest eggs under a radical overhaul of the nation’s superannuation system.

The Productivity Commission will today reveal its suggestions to reform the confusing and complicated super industry to stop Australians losing track of where their money is invested.

Workers currently have their superannuation contributions directed to a “default” fund every time they change jobs, unless they nominate to use their preferred fund, which has left 40 per cent of people holding multiple accounts.

The Productivity Commission says this is an “egregious systemic failure” which requires major reforms to ensure people are only allocated to a default fund when they first join the workforce.

“Around two-thirds of members rely on defaults,” Productivity Commission deputy chair Karen Chester said. “This isn’t surprising with super being both compulsory and complex to navigate, especially for young workers.”

The commission has proposed four models: WORKERS choose their own super funds from a list of comparable options. EMPLOYERS choose default funds for their staff, as long as their choices meet minimum standards. SUPER funds compete for a share of the default pool in a tender process. A FEE- based auction where super funds bid against each other to offer competitive fees to those in need of a default account.

The commission’s report said addressing account proliferation and lost accounts could give workers an extra $25,000 in their super accounts when they retired.

It said young people were particularly at risk of losing money because they worked more casual positions and shifted jobs more regularly.