Heffron | A superannuation default for life

A superannuation default for life

Both the Productivity Commission and the Hayne Report identified the long running issue of multiple superannuation accounts as an issue.  Almost everyone has a story about discovering that they or a friend had multiple superannuation accounts as a result of having multiple jobs throughout their lives.

Hayne has supported the Productivity Commission’s recommendation that an individual should have a single “default” superannuation account that effectively follows them from job to job.  Should they start a new job and not nominate another superannuation account, their superannuation would be paid into that default rather than an account nominated by their new employer as the default for all employees.

This would not prevent people from exercising their right to choose a different account – or even from having superannuation from different employers paid into different superannuation funds.  It is simply changing the mechanics of how a fund is chosen when the individual makes no choice.

Some will support an alternative – continue to allow employers to choose the default fund but provide a means of compulsory “aggregation” when individuals end up with multiple accounts.

Hayne’s solution stops the problem in the beginning rather than waiting until it happens and then tidying up the mess.

It will be interesting to see how that very first default account is chosen.

See more on our Royal Commission commentary