The superannuation industry is not in as good shape as many superannuation fund executives would have people believe, according to the Minister for Revenue and Financial Services, Kelly O’Dwyer.
The minister has used a weekend radio interview to reinforce the Government’s desire to see the Productivity Commission drive necessary change.
“There are lots of people in the industry who think the system is perfect and there should be no change whatsoever,” she said. “But the truth is, when you look very closely at it, the industry has done very well for itself and the question is – are individuals themselves getting the retirement income they deserve for the money that they’ve actually put in?”
The minister’s comments have come amid increasing levels of media coverage around the cost of insurance inside superannuation and the manner in which this eroded member balances, particularly among the young and lower paid.
O’Dwyer said she believed there were many young people who, by virtue of lots of different part-time jobs, accumulated a range of superannuation funds and because of enterprise bargaining agreements might be forced to be in multiple funds.
“…and the default arrangements as they’re set up right now force those young people to pay insurance premiums,” the minister said.
“If you’re paying out multiple insurance premiums right from when you first start your job, you can find that that steadily erodes the retirement income you’ll ultimately get in the years to come, instead of consolidating into one particular account.”