1.7M Working Aussies Locked Into Horrible Super Nightmare
A member of a sub-standard Industry Superannuation Fund could be potentially $170,000 worse off than a member of a best performing fund because of the current industrial system, according to the Financial Services Council (FSC).
Using Australian Prudential Regulation Authority (APRA) and modern awards data, an analysis by the FSC found subscale funds managed $94 billion and left up to 1.7 million members potentially hundreds of thousands of dollars worse off in retirement. The FSC said these funds made up 153 (30.2%) of modern award superannuation listings and 33 funds managed less than $10 billion in funds. The average performance of the 33 funds over 10 years was 4.5%.
The FSC said this was 0.8 % lower than the average 5.3 % performance of all ‘growth’ options in the market for both industry and retail funds, and 1.4% lower than the performance of the best performing MySuper products.
The weakest performing fund returned 2.7 per cent over 10 years, managed less than $1 billion, and was listed in two modern awards. FSC chief executive, Sally Loane, said: “If this many Australian workers were enabled by law to languish in poorly paying jobs with working conditions way below their peers, for as long as 40 years, there’d be outrage across the entire community”.
Many can’t change funds because of the current industrial laws governing default super, and many are chronically disengaged and disinterested. Either way, the system needs to change. The of prevalence of these industry funds in the default system was a major public policy issue that has been failed to be addressed by government.
Talk to us if you believe your fund is underperforming. We are happy to provide strategy and advice on how you can switch to a fund that will deliver stronger returns and a more comfortable retirement.
This information is current as at 07/12/2017.
This article has been prepared by Heart1Stop, a social media brand owned by Heart Mortgage Services and Heart Financial Advisers. The information contained in this article is an overview or summary only and it should not be considered a comprehensive statement on any matter nor relied upon as such. The views expressed here are not those of Heart1stop, Heart Mortgage Services, Heart Financial Advisers, shareholders, directors or staff and associated contractors and business associates. This article has been prepared without taking into account any person’s objectives, financial situation or needs. Because of this, you should, before acting on any information contained in this article, consider its appropriateness, having regard to your objectives, financial situation or needs. Any taxation information contained in this article is a general statement and should only be used as a guide. It does not constitute taxation advice and is based on current laws and their interpretation. Each individual’s situation may differ, and you should seek independent professional taxation advice on any taxation matters. While the information contained in this article may contain or be based on information obtained from sources believed to be reliable, it may not have been independently verified. Where information contained in this publication contains material provided directly by third parties it is given in good faith and has been derived from sources believed to be accurate at its issue date. It is not the intention of Heart1Stop or Heart Mortgage Services and Heart Financial Advisers that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. To the maximum extent permitted by law: no guarantee, representation or warranty is given that any information or advice in this publication is complete, accurate, up to date or fit for any purpose; and no party of Heart1Stop or associated entities as mentioned is in any way liable to you (including for negligence) in respect of any reliance upon such information. This article may also contain links to websites operated by third parties ("Third Parties") who are not related to Heart1Stop. These links are provided for convenience only and do not represent any endorsement or approval by us.