Actuarial consultants, Rice Warner, are the latest group to claim that Australia’s compulsory superannuation system is costing taxpayers more than it saves in Aged Pension costs. From The Australian:
The government’s age pension bill will be weighed by dismal returns in the bank-run superannuation “choice” sector, according to a report from Rice Warner that predicts the cost of savers choosing not to switch into a low-fee MySuper product will cost more than $50 billion over the next decade… equal to more than a year’s worth of Age Pension payouts at current rates…
Although the superannuation system was designed, in part, to take pressure off the Age Pension bill — the biggest category of welfare spending in the federal budget — the system has not resulted in a substantial increase in net national savings. Rather, generous tax breaks given to the superannuation sector have meant the revenue cost to the budget has exceeded any savings in pension outlays…
After a two-year review, the Productivity Commission found many savers had been shunted into underperforming funds, others were dudded by rampant fee gouging, there was a lack of competition among big default funds and too much money was being spent on bells and whistles, such as smartphone apps, in the high-fee retail fund sector…
“High fees and poor performing choice products are a drag on the efficiency of our super system, which ultimately is a cost to all Australians in the form of higher Age Pension costs,” AIST chief executive Eva Scheerlinck said.
More reason to make Australia’s superannuation system voluntary, as well as making superannuation concessions more progressive.
