Some retirees could find themselves with a $124,000 shortfall

A new report finds that Australians in the Future Fund could be worse off.

Some retirees are set for a shortfall

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.

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    COMMENTS

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    TREBOR
    30th Jan 2019
    10:53am
    Proof positive of the merits of The Trebor Scheme - Roll the Future Fund into the National Superannuation Scheme, without interference from any politicians past and present, and out of the hands of all business structures, including Unions running super. Add the Social Security Levy still being taken and draw on other strands of revenue as required (as per Menzies way back), accept additional top-ups from individuals under the same rules for all.

    I doubt that those I know who are in the Future Fund will be worse off....... some small 'shareholders' may be - e.g. the perpetual privates who go from a six year stint to unemployment ...

    Social Security as it now stands needs a full revamp.
    GeorgeM
    30th Jan 2019
    11:39pm
    Agree with the above regarding the Future Fund, and a full revamp of Social Security.

    Isn't that sort of thing something one would expect a Labour (with "u" / you in it) to do? Of course, we only have an American version of Labor (without "u" / you) so that seems to be the problem here - no party for the people. Wonder when the Yellow Vests will arrive here!
    Not a Bludger
    30th Jan 2019
    11:02am
    How naive it would be to give this report any credence whatsoever.
    Rentseeker Gallagher, who in this article is lauded as a tax office expert, is actually trousering Industry Super’s coin as an employee - no wonder his report both favours and recommends Industry Super.
    Just another part of the continuing push to hand control of my (and your) super to union thug bosses and the super funds controlled by them.
    Karl Marx
    30th Jan 2019
    3:23pm
    Industry funds have outperformed retail for years.
    The RC on super funds cleared all industry funds of any wrongdoing or bad, illegal management practices not like the retail funds that were overcharging & underperforming & encouraging bad practices.
    If the union bosses are thugs why aren't they charged as such.
    Your comments are rubbish & show you're only a right wing union bashing troll.
    P$cript
    30th Jan 2019
    11:30am
    No puzzle why the future fund is not performing, Peter Costello has been on the board since 2009
    Polly Esther
    30th Jan 2019
    9:51pm
    and Bill Shorten doesn't even know what it is.
    old frt
    30th Jan 2019
    11:51am
    What a joke . They must think the SMSF pool of funds is as good as theirs , now they are after the future fund .
    By the way if it were not for Costello there would be no future fund .
    TREBOR
    30th Jan 2019
    12:07pm
    You laud the theft of $130Bn from the Treasury to place it in a tax haven, pay no tax, and solely to secure forever the income of politicians and a few others?

    Now make me laugh and tell me they donate a few lazy mill to health research and such.. window dressing for Grand Theft Canberra.

    Any Central American Banana Repubic dictator would be proud of stealing $130Bn from La Treasuria and putting heem into an account in a tax haven to feed himself and cronies forever, por favor....

    Costello should be tried and hung.... well, RICO'd and imprisoned and stripped of all government handout income forever...
    floss
    30th Jan 2019
    12:44pm
    Thank god for Industry Super it has been great for our retirement.Still a Bludger you really hate working people i think you may be a would be if you could be.
    Anonymous
    30th Jan 2019
    4:14pm
    Bludger is obviously a LNP troll.
    floss
    30th Jan 2019
    12:56pm
    So that means the Union run super is going better then the rather dubious Future Fund that is a huge tax dodge.Buy Australian Peter just like the Union run funds do.It seems to hurt some people that working class people can have super how very un Australian.
    Bruce
    30th Jan 2019
    1:02pm
    This sounds like a laundry powder advert. My enzymes are bigger than their enzymes.
    This does not ring true. I'm in a non union industry fund. Loses money just the same as all the others.but. for two years,my payments were covered by interest.but not now.
    Only those in the Future fund would know it's progress or recess. Political argument means nothing when it comes to the share market.
    KSS
    30th Jan 2019
    1:04pm
    "Mr Gallagher, who spent 21 years leading Treasury’s retirement income modelling unit, is now a special retirement income adviser for Industry Super."

    No conflict there then!
    Sundays
    30th Jan 2019
    1:49pm
    A lot of this makes no sense. The future fund was set up to pay for ongoing superannuation liabilities of retired public servants and military personnel. The bulk at this point in time were members of defined benefit schemes. They receive their pension based on final salary x years of service and contribution rate. The performance of the fund makes no difference to them. Also, there is approximately $149 billion in the fund at present which is up from $117 billion in 2015. It’s doing ok
    GeorgeM
    30th Jan 2019
    11:34pm
    Thanks for your clarifications.
    I think the reason why taxpayers need to be concerned about the Future Fund is that if that fund doesn't provide adequate returns to pay pension liabilities, then they WILL dip into consolidated revenue as they MUST be paid. It is also currently out of proper prudential control I think - Costello was used to good times only and cannot be trusted to manage it wisely (of course he can't hand out a donation for a 3rd baby for the Country!). That's why Trebor's scheme (1st comment above) makes full sense.
    Karl Marx
    30th Jan 2019
    3:29pm
    People have a choice on super funds or even SMSF but the majority of young people have no interest in looking at their super or even know how it performs. If they don't manage their super & it underperforms then that's just tough as they have choices.
    You roll the dice you pay the price.

    30th Jan 2019
    4:13pm
    That Lieberal gangster Costello is responsible for this.
    Cheezil61
    30th Jan 2019
    4:56pm
    So if we already have any super stashed & waiting to access it there is still no guarentee it will be available (as lump sum or allocated pension) regardless of which fund it is in. Any government in power (current or future) will be wanting to get their greedy mitts on it (as per the 7.5% tax that was apparently taken from our wages years ago to cover our pensions in retirement!).
    I'm 57& still working full time & it has been only little help in reducing my tax burden each year thru salary sacrifice (industry fund) & I've been battling to pay out the mortgage (after to relaionship breakdoown/setbacks) for many years so have had little spare money (apart from the basic bills) & hope to retire with mediochre amout of super (whats left of it after all the fees, charges & taxes are taken out-our money is not OUR own is it!) but am terrified it will not be available by the time I can access it at 60 without losing significant amounts of it in tax!
    But what is the alternative (hoping that I'll be on a govt payment/dole & maybe a super top up of some sort) & Centrelink will deem that I earn interest from it wherever I leave it I daresay? There's no getting ahead is there when you start getting old? Doing well to keep the head above water these days! Financial advice cousts even more of our precious hard earnt $ as well!


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