Revealed: Millions of Australians have poorly performing super plans – and failing to act could cost you $500,000 by the time you retire
- Super Consumers Australia says more than 170,000 a year put in bad super plan
- They estimated this could see someone miss out on $500,000 by retirement
- Group’s acting director Xavier O’Halloran likened super to an ‘unlucky lottery’
- It wants only the best performing products to be chosen for default accounts
Australians who are too apathetic to shop around for better superannuation plans could be missing out on $500,000 by the time they retire.
Super Consumers Australia said more than 170,000 people had their superannuation parked in a poor performing account in any given financial year.
The consumer advocacy group’s acting director Xavier O’Halloran said the default super system was like a bad lottery.
More than 1.6million Australians have their savings languishing in a poorly-performing super account, a Productivity Commission inquiry last year found.
Australians could be missing out on $500,000 in retirement savings because they are apathetic. Super Consumers Australia said more than 170,000 people had their superannuation parked in a poor performing account in any given financial year
‘These superannuation laggards continue to attract tens of thousands of new members each year through a badly designed default system,’ Mr O’Halloran said.
‘Our superannuation system is an “unlucky lottery” for too many Australians.’
In 2017-18, 176,000 default superannuation new accounts were created for MySuper products in the bottom 25 per cent of performers.
These accounts were added to the one million worst-performing MySuper accounts.
Super Consumers Australia cited research from the Productivity Commission which calculated someone with their savings parked in a bad default account stood to be $502,000 worse off by the time they retired.
Its own research showed default products like BT and industry funds Mine Super and WA Local Government Super were particularly bad.
‘We need the regulators to take real action to weed out these laggards, but we acknowledge that this will take time,’ Mr O’Halloran said.
‘The regulator’s job will be made easier if we stop growing under performing products through a poorly designed default system.’
It cited research from the Productivity Commission which calculated someone with their savings parked in a bad default account stood to be $502,000 worse off by the time they retired
Super Consumers Australia wants the federal government to change the law so only the best performing products could be used for default super.
It also wants funds to be banned from creating duplicate accounts, which often leads to fees eroding retirement savings.
Australia’s superannuation savings are now worth $2.9trillion, or almost a third more than Australia’s $2trillion economy, making it the fourth largest private pension pool in the world for a nation with 25million people.
Employer super contributions have been compulsory since 1992 and are increasing from 9.5 per cent to 12 per cent from July 2025.
In July, new Liberal senator Andrew Bragg, a former director of policy with the Financial Services Council which represents retail super funds, called for low-income workers to have the choice opting out of super.