The super nest eggs of Australians could benefit from $416 billion more – up to $189,000 per person – under a new proposal from Industry Super Australia (ISA) to overhaul the superannuation system.
Independent consulting firm, KPMG, has undertaken this detailed cost-benefit analysis of the plan, and found that the best way to eliminate multiple super accounts and lift performance across the system was to automatically combine a person’s super when changing jobs into a single quality checked fund.
This report examines how intelligent use of technology could tackle the two most costly drags on the system – chronic underperformance and multiple accounts – simultaneously.
The report models two options to implement the Royal Commission recommendation that a person should only have one default account, with machinery developed to ‘staple’ a person to a single default account.
Industry super funds recommended model would see the money in a worker’s super account follow them from job to job, by automatically rolling over the money into a quality checked, single account when they change jobs, unless they choose otherwise.
The alternative is to allocate a person to a single fund for life, unless they choose otherwise.
KPMG found that the industry super fund model of automatic rollover would not only eliminate multiple accounts, it would accelerate the weeding out of underperforming funds from the system sooner, delivering greater returns to workers.