Superannuation changes could boost some Australians’ retirement savings by $500,000

Superannuation changes could boost some Australians’ retirement savings by $500,000

January 10, 2019

Australians could reportedly retire with an extra $500,000 in superannuation if the federal government adopts the recommendations of a report into the $2.8tn sector.

Revoking the licences of funds that persistently underperform is among advice in the Productivity Commission’s final review on superannuation.

The prudential regulator would strip the licences of funds that lag behind for eight years, if they fail to improve their results within a year.

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The commission’s report, released on Thursday, also recommends Australians be given a list of the 10 best superannuation funds to choose from when they start a new job.

That advice had been included in the commission’s interim report in May, and is expected to boost Australia’s retirement savings by $165,000.

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The treasurer, Josh Frydenberg, said the report showed the superannuation system was serving the nation reasonably well but there were “significant issues to address”.

“We are committed to putting the interest of all members first,” he said on Twitter on Thursday.

The Productivity Commission has also maintained advice from its earlier report to grapple with the high number of unintended multiple accounts Australians hold.

About a third of accounts, or 10m, are accidental multiples, the authority’s investigation found.

The Productivity Commission believes reducing multiple super accounts, cutting the impact of insurance fees, increasing competition and getting people into better performing funds would deliver an estimated $3.8bn a year overall.

For a person starting their first job now and retiring in 2064, the commission believes the changes could give them up to $533,000 more when they retire. For a 55-year-old, the changes could boost their retirement savings by $79,000.

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