Poor-performing funds costing Aussies $500,000 by retirement age

More than one million accounts are costing retirees a fortune.

Poor-performing funds costing Aussies $500,000 by retirement age

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.

Do you have your money in a poor-performing fund?

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    COMMENTS

    To make a comment, please register or login
    johnp
    7th Oct 2019
    11:42am
    Simple solution; name them all publicly like on front page of newspapers and not just those three !!
    adbob
    7th Oct 2019
    2:29pm
    It's now well-known that industry funds beat retail funds by a mile - especially in accumulation mode - on account of less fees - and of course that is their main boast - but beware of the fees that they charge in pension mode.

    They don't crow about that and you might get a nasty surprise if you idly roll your accumulated pension pot into pension mode with the same fund you accumulated it with.

    It still pays to shop around.
    Jacky
    7th Oct 2019
    7:58pm
    I thought you actually saved money when in pension mode, as you don't pay 15% tax on earnings. So what fees do they charge?
    The Care Bear.
    8th Oct 2019
    8:01am
    It's mind boggling that there are people that believe that they save money in pension mode and don't pay fees.
    How does Govt. protect these people from themselves.
    Karl Marx
    7th Oct 2019
    3:22pm
    name the worst 100 in order
    Horace Cope
    7th Oct 2019
    4:29pm
    Employees need to be able to nominate a super fund of their choice, not the fund that employers want to place them, this should eliminate the duplication of accounts and the need for double fees. As to ensuring people are only defaulted into the best performing products, the positions of super funds change year on year so how would that work? A fund that is a top performer this year may not be a top performer next year even though the returns are above the average. If employees are allowed a personal choice I'm sure that non-performing super funds would disappear through a lack of members.
    The Care Bear.
    8th Oct 2019
    8:02am
    Where have you been for the past 3 years? Employees have the right to nominate their Fund Of Choice.