Peter Costello calls for Government control of default super

Peter Costello calls on the Government to take control of default super.

Peter Costello calls for Government control of default super

Former federal treasurer Peter Costello has proposed that the Government should take more control of super, specifically, how default funds are managed.

Default super funds are those chosen by an employer when an employee does not specify to which organisation they want their super paid.

Speaking at an event last week, Mr Costello said that default super should be managed by the Government, similar to how the Canadian Pension Plan Investment Board (CPPIB) system works.

He believes that allowing the Government to control default funds would eliminate the fight between industry and retail funds for the right to default super and would be a vast improvement on the current arrangement.

"Instead of the government arbitrating between industry funds and private funds, there is a fair argument that this compulsory payment should be allocated to a national safety-net administrator – let us call it the Super Guarantee Agency – a not-for-profit agency," said Mr Costello.

"There would be huge economies of scale. It would end the fight between the industry and the profit sector over who gets the benefit of the default funds," he said.

“A bigger pool with economies of scale and access to the best managers would likely drive down costs and drive up returns – it would be in the interests of all, except of course the fund managers,” said Mr Costello.

"Neither sector has been able to attract the money voluntarily. It exists by reason of government fiat. The government has decided it should go into the super system – it could show some interest in managing it in a cost-efficient way."

However, the Association of Superannuation Funds of Australia (ASFA) doesn’t agree, saying that Mr Costello’s idea would be the equivalent of nationalising superannuation.

"In the context of the broader public debate around the efficiency and competitiveness of the superannuation system, it is almost inconceivable that anyone would countenance a government monopoly delivering the best retirement outcomes for Australians,” said ASFA Chief Executive Martin Fahy.

"What is being proposed is in essence the nationalisation of private, individual superannuation savings.

"The Future Fund effectively operates as the Australian Government’s wholesale investment manager. However, it lacks the required governance framework and administrative capabilities needed for it to operate in a superannuation context."

Mr Fahy doesn’t believe the Government would be as effective as the current arrangement, and that the $900 million invested in the SuperStream program would be wasted.

"Mr Costello’s proposal would also require the government to set up and operate a centralised facility to undertake administration functions for the government-run fund. Effectively, this would see administration services for many member accounts transferred from private sector operators to a government administrator," said Mr Fahy.

"Entrusting administration to a government-run entity would reverse significant efficiency gains delivered through the government’s SuperStream program, which sets very high standards for private administrators."

"It would also require faith that government could deliver more efficient, effective and reliable administration services than the private sector," he said.

"The reality is that transferring administration functions to a government body would create single-point-of-failure risk for members."

What do you think of this idea? Would you like to see a system where less money is diverted to fund managers and more put into your pocket?

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    COMMENTS

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    bob
    16th Oct 2017
    10:24am
    I presume that this money would be as safe as my government pension fund that I paid into for 55 years only to be told I am not eligible to get any back as my industry super fund did too well.There is no way that the government would be able to keep their hands off this money,they do not have the integrity.If you want to see less money diverted to fund managers and more in your pocket join an industry fund.
    sunnyOz
    16th Oct 2017
    10:33am
    One question - does ANYONE believe the govt would actually do anything to help the ordinary person? Yeah right. Firstly, they would ensure their own pension was exempt from any govt management. And secondly, for money that we have salary sacrificed, that is OUR money, and no way should the govt have ANY control over MY money.
    Anonymous
    16th Oct 2017
    2:55pm
    Your cynicism is well-merited.
    disillusioned
    16th Oct 2017
    11:23am
    I wouldn't trust anything this LNP government set up - it's a greedy grab for anything they can use to plug the deficits caused by their own fiscal mismanagement. The only pensions and superannuation payments going up is their own, while they blow a further hole in the Budget. I have worked for the government, and would rather see my super managed by the semi-private sector!
    Anonymous
    16th Oct 2017
    2:57pm
    100% agree!!! The Lieberal Nazi Party are greedy, inept bunglers, who are totally blind to the fact that we live in a society, not just an economy. They are tenth-rate beancounters/
    niemakawa
    16th Oct 2017
    3:09pm
    Labor /Greens are no different so don't place your trust or faith in those parties either. There are far better alternatives, parties that have a Nationalistic approach and put Australia and Australians first and foremost. Lib/Lab/Greens need to be buried once and for all, traitors all of them to our once great country.
    MICK
    16th Oct 2017
    11:24am
    I read this on the weekend.
    Allowing this government in particular to control superannuation accounts is paramount to giving Dracula the keys to the blood bank. This lot and Labor as well have been circling the money pot for years trying to work out how they can get their grubby little hands on the loot. I have long said they will nationalise super to achieve their aims. Then expect the bastards to spend/waste our money the same as they did with the pension system which was funded by workers and then rolled into consolidated revenue and spent.
    This has nothing to do with helping anyone other than governments which want to spend like drunk sailors and leave us all destitute when we retire. ANybody who believes the lie Costello is spinning deserves what they are going to get. Its deceitful and well thought out.
    Anonymous
    16th Oct 2017
    3:00pm
    At least Labor introduced compulsory super for the benefit of all.
    Rosret
    16th Oct 2017
    5:42pm
    Costello was the one who initiated all the incentives to promote private superannuation funds. He was an excellent Treasurer and I think a nationalised super fund would be a sound idea.
    The downside would be a future government selling it off.
    It would save millions in fees and we would actually get the true investment returns as opposed to the amount the private funds choose to give us.
    It could be coupled with a manageable fortnightly payout as the old super funds used to provide. It would give so much more security and financial confidence in our retirement years.
    MICK
    16th Oct 2017
    9:26pm
    Very very short sighted Rosret.
    First thing Costello was treasurer when the country was going gang busters. Remember the 'Baby bonus'. That produced young girls getting themselves pregnant to collect the $5000.
    Second thing is superannuation. Why do you think the bastards want to change the current arrangements? Black and white. They want to get some of the action. You would know that.

    16th Oct 2017
    11:59am
    In my latter years of work, I worked a lot of casual jobs with different employers and because of their choices, I had a number of super funds. Each one attracted fees and as a result I was being charged more than if all my super was in one fund. A lot of places I worked had EBA's that included all employees paying into an industry super fund. Nothing wrong with that except it took away the right for an employee to decide which super fund was better for them. I don't agree with super funds being held by government but I would like to see that employees had the choice as to where they wanted their super funds invested.
    sunnyOz
    16th Oct 2017
    12:57pm
    Must have been before 1.7.2005, because since then most employers have been required to give their employees a choice of fund for their superannuation guarantee contributions. It is only if the employee fails to choose, or chooses a fund which cannot be used by the employer, that the employer will be able to choose the fund.
    Anonymous
    16th Oct 2017
    1:39pm
    Yes it was sunnyOz, glad to see that the problem has been fixed. Thanks for your comment.
    Baby Huey
    16th Oct 2017
    12:08pm
    Just imagine. Another incompetent shiny arse government department to urinate ordinary workers hard earned money up against the wall. Governments of all sides want to get their grubby hands on the large pool of super savings. I would not give any government the stink off my feces much less any control of my super.
    pedro the swift
    16th Oct 2017
    12:12pm
    NEVER give gov control of any type of super. You would completely lose ALL control over your own funds. This talk of giving them control over "default" funds is just the thin edge. Once they get that it won't be long before the case will be made to give them control over all. Can you imagine what will happen to your money then. Big salaries(even bigger than those paid now) to the beauruacrats who will run it. Huge gees going to gov.
    Just DON'T allow this to happen
    Tib
    16th Oct 2017
    12:25pm
    I have a feeling the government would treat my super like it's their money and after a few years like the government pension they would act like they are doing me a favour by giving me any. So many greedy eyes on our super.It's my money they can go to hell.
    4b2
    16th Oct 2017
    12:37pm
    Great idea Peter. Now how about the same for Health Insurance.
    World Prophet
    17th Oct 2017
    1:14pm
    Absolutely! Let's face it, if you want something run super efficiently, let the government run it! Super, health, private education, the list is endless!
    Julian
    16th Oct 2017
    1:10pm
    Hahahaha...trust the government with your money...?

    NO
    Poppa Bear
    16th Oct 2017
    1:14pm
    It still happens today, sunny Oz. Companies such as Coles, some accounting firms, and other places I have worked give you no choice but to pay into their default fund. You cannot transfer your money to your choice of fund until you no longer work for that company.
    Triss
    16th Oct 2017
    1:25pm
    And, of course, another few highly paid public servants would have to employed to look after it, business class jaunts to check how other countries cope, etc,etc.
    No thanks.
    Rosret
    16th Oct 2017
    5:50pm
    I had no choice with my employer either. My son thought his employer was paying money into a super fund however he wasn't and had to take him to court - and then change jobs. My neighbour worked for a business man for 20 years who went bankrupt the company went into receivership and he lost all his superannuation. My boss in one company invested in AMP super fund and it bottomed out in the 80s. The list goes on.
    This new system is so unfair and believe me private super fund executives take home pay an awful lot more than any government exec.
    KSS
    16th Oct 2017
    1:26pm
    First of all Mr Costello is a FORMER politician and is NOT part of this or any other Government and has been out of politics for 10 years. He is entitled to his opinion as are we all but that does not make it Government policy.

    Second, with this and previous Governments of all levels busy selling off everything to the private sector because they believe the private sector can run things better and cheaper than they can, why would we want to accept that only in superannuation can the Government do better?
    Anonymous
    16th Oct 2017
    3:02pm
    But he is still a Rightard clown.
    Eddy
    16th Oct 2017
    3:51pm
    Without either endorsing or rejecting Mr Costello's proposal I am willing to at least listen to what is proposed. In other word I do not reject it out of hand. I do not share some respondents view that governments, of either persuasion, cannot be trusted with our superannuation. We have only to look at what has happened since the private sector took over electricity , gas, water and the Commonwealth Bank to take the view that the private sector cannot be trusted with essential services.
    Rosret
    16th Oct 2017
    5:58pm
    KSS it was such a different government when Howard and Costello were a team. Off shore gas was preserved and the nation utility sell off was nowhere near as extensive as it has ended up today.
    Costello encouraged us to contribute to the private super funds with many generous tax concessions.
    I think the superannuation schemes need a government super fund to get some honesty and equality back in the system.
    Surely we need something to fix the pendulum annual interest rates as the stock market investors play with our money.
    Rae
    16th Oct 2017
    6:16pm
    Yes KSS. THey've run out of our money to spend. The assets that returned revenue are all gone. Now we are paying rents instead of receiving them and paying fees and charges when once we could charge them because they were public utilities and institutions.

    Neoliberalism is in it's dying days and it won't be fun when the money go round stops and the Markets correct. They always do eventually.

    I'm glad I don't have to contribute 9.5% of money each fortnight to overpriced shares, bonds and property. There is no value there now and there won't be until well after the corrections.

    I've taken my profits already and am saving into cash. Every single asset class has little value at current prices.
    floss
    16th Oct 2017
    1:55pm
    Trust this mob with my money no thanks they can't even look after our power gas or water.
    BElle
    16th Oct 2017
    2:33pm
    It can't possibly be any less beneficial than the incompetence I have encountered by the "Super" funds. I am making reference to some of the big name companies. I cashed mine in and invested myself. No regrets on that part. The current system just makes the Fat Cats even fatter. I agree with Bob about the Industry Super Funds. These are run for the benefit of the employee --- not the fund managers. The same system should apply to everyone. This is supposed to be the fair-go country.
    niemakawa
    16th Oct 2017
    2:54pm
    "What do you think of this idea? Would you like to see a system where less money is diverted to fund managers and more put into your pocket?""

    Had a good laugh when I read this.

    Absolutely not, the Government will steal the money within a blink of an eyelid. Only fools would trust any Government to look after their money.
    MICK
    16th Oct 2017
    9:28pm
    CORRECT. That is why they want this. I am surprised that so many of the above cannot see the game plan.
    sunnyOz
    17th Oct 2017
    8:24am
    Be very cautious of anything Costello says. I will NEVER forget watching an interview with him many years ago, where he said that older Australians, if their home was valued over a certain amount, should have to sell and live off the money before going on the pension. While he sits there on his obscene pension, plus earning big bickies that are exempt from assets/income test. Disgusting.
    Boof
    16th Oct 2017
    3:02pm
    It is very hard for any workers to trust in anything the Govt. has a hand in.
    However. If it was a truly run NOT FOR PROFIT organisation & the Govt. could actually keep their sticky fingers off the scheme. I think it can work to our benefit. Sounds good, to me.
    niemakawa
    16th Oct 2017
    3:04pm
    Dream on.
    Rosret
    16th Oct 2017
    6:06pm
    I agree Boof. Just look at Medibank Private that was sold off. It is all about them and profits now. I think a national superannuation scheme would be great.
    They have run funds for successfully decades and I can't see any reason why they would not continue to be so in the future. In fact the DFRDB (defence) system is the better than most other systems available to Australians.
    Patriot
    16th Oct 2017
    6:32pm
    The Aust Govt was in charge of the FUND consisting of collected money on behalf of the Old Age Pensioners.
    They STOLE & SQUANDERED that!!!
    Why trust them with more money yet again!
    They'll STEAL this once again.
    Once a THIEF - ALWAYS a THIEF!!!
    niemakawa
    16th Oct 2017
    7:08pm
    Agree Patriot. I like your name, pity this country is full of neo-liberals who hate us. Patriotism to the fore.
    cupoftea
    27th Nov 2017
    8:43pm
    I am writing this at the end november and this weekend billieniers Rienhart,lynfox,and others including Keating wated to use our money instead of going overseas or banks f--k it i am drawing mine i was told to 4yrs ago
    Ausdigga
    16th Oct 2017
    7:05pm
    He's joking right ? He is isn't he .?
    No government has ever made money except by selling off our assets, and what sensible business does that ?

    16th Oct 2017
    11:47pm
    And so it begins! It was inevitable that a broke, corrupt and untrustworthy government would eventually set its sights on our super savings. They already stole the pension fund we accumulated. That superannuation pool has reached dizzy heights and it was inevitable that the government would want to find a way to get it's stinking hands on that money. DO NOT LET THEM! Nothing they say can be believed.
    niemakawa
    16th Oct 2017
    11:52pm
    Yes I agree. Not only the Libs but Labor too would like to get a hand on all the Super. funds. Don't ever be fooled by their generosity, they care not about the Australia people.
    Patriot
    17th Oct 2017
    8:31am
    Rainy,
    Agree 100% - HOWEVER:

    In the end, the BANKSTERS will get it by either:

    1 Collapsing the global economy & Stockmarket
    2 Via the squandering habits of the Aust Government - unconditionally of WHO is in power!

    This also does NOT mean we shouldn't make harder for the Ba**ards to "Get-at-it-Though!!!!!
    old frt
    17th Oct 2017
    10:55am
    Once again half the people only read half the article - it is about the default super, which the retail super funds love to milk .These funds are the ones our kids start out with and quite possibly end up with 6 or more different funds {due to part time jobs} before they realise the value & importance of their super.
    THEY ARE NOT TOUCHING OUR EXISTING SUPER FUNDS

    17th Oct 2017
    3:57pm
    Great idea Mr Costello

    Singapore has a great system - efficient and provides great returns

    Wish Pete was our PM
    niemakawa
    17th Oct 2017
    4:08pm
    Singapore does not have a benefit culture as does Australia. Work and work hard is the Singaporean motto , then you will get your rewards.
    Anonymous
    17th Oct 2017
    4:21pm
    Like I said, Spore has a great system

    We should cut the benefits - far too generous. Thta will get theur lazy arses back to work , save and invest
    niemakawa
    17th Oct 2017
    4:37pm
    Yes especially unemployment, single (?) parent, baby bonus benefits. These are mainly lifestyle choices exacerbated by Governments supporting them. If Governments continue to allow immigration at the current high levels then that tells me there are jobs available, but many people prefer not to work and claim Government benefits.
    Anonymous
    17th Oct 2017
    11:15pm
    I think, Raphael, your words are a little harsh. Not everyone has the opportunity to work, save and invest, and we should take care of those who can't. The problem in Australia is that everything is geared to rewarding indolence and irresponsibility and punishing hard work and responsible living. We need to reform our welfare system to focus on lifting people up and providing better support for the genuinely needy, but ensuring that there are strong incentives and rewards for effort.

    Yes, Niemakawa, many do prefer not to work, but equally there are many who cannot find suitable work through no fault of their own. The problem is that the system rewards those who exploit it. Work hard and save and you are denied any government support in retirement and made to pay higher costs for everything. Bludge and you get handouts and discounts galore! Goodness, even when it comes to inheritance the worker and saver is discriminated against if a will is contested. The useless bludger just cries ''I'm needy'' and the judge overturns the will and in his favour, after raiding the estate to pay a fortune to greedy unconscionable lawyers who encourage these contests with ''no win/no pay'' offers and advertising that suggests it's a crime to exercise any kind of preference in deciding who should inherit what you worked for.
    niemakawa
    18th Oct 2017
    12:45am
    Rainey can't argue with your summation of the situation that is causing so many problems in our society. I have always been an advocate for pensions for all those that have reached the Government stipulated retirement age. Assets and Income should not enter the equation at all. Those that have prospered through their own endeavours are just as deserving as those that have done little or nothing (by choice) to save for their retirement years.
    Anonymous
    19th Oct 2017
    9:22am
    Couldn't agree more, niemakawa. Aged pensions for all would remove the disincentive to saving and endeavour and make for greater general prosperity and increased spending that would drive economic growth. People would be better placed, in old age, to pay for health services and aged care if the government-provided services weren't sufficient.

    Until we abolish the current nonsense oppressive welfare system and the system that rewards tax avoidance, our economy will continue to languish. We need higher but fairer taxation (which equates, logically, to lower tax at the bottom end) and vast increases in spending on social and community services and welfare if the economy is to grow and we are to achieve social health.
    GrayComputing
    18th Oct 2017
    12:47pm
    The wheel goes round and round and stops Gods know where.
    At least we can vote the bastards out. Much better then the Private Super Robber Baron MLC that lost 1/2 million dollars of my super
    niemakawa
    19th Oct 2017
    5:37pm
    Directors and CEO more than likely get a great performance salary increase