A new report has found that Australians in the Future Fund could be much worse off in retirement than those in a top-performing industry super fund.
The analysis by former Treasury official Phil Gallagher revealed a performance difference between a top-performing industry fund and the Future Fund that could cost workers earning $80,000 per annum 13.6 per cent of their retirement benefit, or $124,850 in real terms.
The findings follow recent speculation that the Future Fund could be designated a public offer superannuation fund open to workers and employers as a default fund.
Industry Super Australia (ISA) chief executive, Bernie Dean, said Mr Gallagher’s modelling showed the Future Fund was not a viable option for workers’ superannuation savings.
“We need to find ways of connecting workers with quality super funds, not find new ways for them to end up with less in their accounts,” said Mr Dean.
“The extent of the loss calculated under the Future Fund scenario suggests ideology is blinding some to the best ways to put members’ interests first.
“The Productivity Commission has ignored the evidence and recommended a flawed scheme, and, now, people are suggesting we consign workers to an underperforming government-run fund,” he said.
Mr Gallagher, who spent 21 years leading Treasury’s retirement income modelling unit, is now a special retirement income adviser for Industry Super.
His analysis considers the Future Fund’s recent performance; compares it to the top quartile industry super funds’ balanced pension options over the past seven years; and models retirement savings from the age of 30 to almost 40 years on.