Aussies are losing billions each year by sticking with poor-performing super funds.
New research by Industry Super Australia found that 850,000 members who failed to leave their dud MySuper product had lost a combined $1.6 billion in the past year.
That equates to an average loss of $1,900 per person, Industry Super Australia found, compared to if they had their super with a top 10 MySuper product.
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“This is a reminder that there is a huge cost to doing nothing if you are in a dud super fund,” Industry Super Australia chief executive Bernie Dean said.
“Lots of people don’t know you can be stapled to a super fund that has failed the Government’s performance test, and that could punch a huge hole in a person’s nest egg.”
Losses can pile up over time. If someone on the median wage with a balance of $50,000 stayed with one of the poor performers for the next 10 years, they could be about $25,000 worse off, the research found.
If a 30-year-old was stapled to one of the dud funds for the rest of their working life, they could be $225,000 worse off at retirement.
In 2021, the Australian Prudential Regulation Authority (APRA) tested all MySuper products and 13 products failed, based on poor investment performance, costs and fees. Of those, four have since exited the industry.
Only about 10 per cent of Aussies switched out of the super funds that failed the test, Industry Super Australia said.
This year, APRA tested 69 MySuper products and failed five of them - four failed for the second time in a row and are now banned from taking on new members.
These dud funds cover about 600,000 member accounts worth around $28 billion.
Aussies don’t have enough for retirement
It comes as 60 per cent of Aussies said they wouldn’t have enough savings and assets for retirement, according to a survey of 1,018 Australians by Money.com.au.
“The unfortunate reality is that to meet their expected retirement incomes, a large segment of the population will need to work longer or make significant sacrifices,” Money.com.au spokesperson and financial adviser Helen Baker said.
More than half of Aussies surveyed (57 per cent) said they wanted to retire with more than $60,000 per year, while a third (35 per cent) wanted more than $80,000.
These expectations are well above the Association of Superannuation Funds of Australia Retirement Standard, which estimates singles will need $47,383 per year for a comfortable retirement, while retired couples will need $66,725 per year.