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Call for universal default fund
Australian workers might be better served in terms of costs and access by the Federal Government establishing a single, default superannuation fund, according to a research paper developed for the Australian Institute.
The paper, written by Dr David Inglis and Josh Fear, argued in favour of the establishment of a universal default superannuation fund in Australia and, in doing so, traverses similar ground to a paper delivered by researchers within the Australian Prudential Regulation Authority (APRA) a year ago.
According to Inglis and Fear, the so-called "Universal Default Fund" (UDF) would apply to between 6 per cent and 16 per cent of the workforce, those workers who do not have a default fund specified in an award or industrial agreement.
The pair said they estimated that, "compared to a high-cost retail fund, a properly designed UDF could add up to $100,000 to the superannuation of an average wage earner who utilises this option over the course of a lifetime".
They claimed that it would also help solve one of the most intractable problems in superannuation - the proliferation of multiple and 'lost' super accounts that erode the retirement savings of millions of Australians.
Among other things, the researchers have urged consideration of the option of capping fund administration fees at 1 per cent of funds under management, with an option to pay higher fees if fund members give express permission.
They said even without a universal default fund, capping fees at this level could raise the average account balance at retirement by $35,000, and even more for the one in three workers currently affected by high fees.
AUTHOR
Mike Taylor
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