Mr Walker spoke at the launch of a Deloitte report titled Adequacy and the Australian Superannuation System: A Deloitte Point or View in Melbourne yesterday.
The report makes a number of recommendations to government, including encouraging higher contributions into super (partly via lifetime rather than year-to-year contribution caps); improving access to advice; facilitating access to deferred and lifetime annuities; and working to better engage Australians with their super.
On the last point, Mr Walker said Deloitte is a “great believer” that competition for members can drive funds to do a “much better job” of engaging members.
“We know there are more superannuation accounts than living Australians,” he said. “We also know that some people benefit from having those inactive accounts either administered by them or drawing fees down on them.”
Asked about the lack of retirement products in the superannuation space, he pointed to the sector's focus on capturing default fund status.
“Part of the problem is that the super funds generally are focused on building up money and not on the benefits in retirement,” he said.
“You can see the incentives that exist in the industry to capture default fund status, and then for members to remain in their default fund and not to make an active choice to leave.”
The industry needs to encourage more direct competition for individual members without “throwing out the baby with the bathwater”, said Mr Walker.
Deloitte superannuation partner Russell Mason pointed out that around 80 per cent of the working population are in a fund that was their default fund – and when it comes to investment options, between 90 and 95 per cent are in the default investment option.
“MySuper achieved a lot, but one of the failings of MySuper is … [that] unfortunately the way it’s turned out is that it’s all handed on a platter [to people] with all the decisions made [for them],” said Mr Mason.
“That disengages people, and we’ve got to reverse that trend – while not losing the good parts of MySuper and Stronger Super.”
