Cooper raises prospect of government-operated national super default fund
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The chairman of the Federal Government inquiry into superannuation, Jeremy Cooper, has raised the prospect of the government operating a national super default fund.
Speaking on ABC television yesterday, Cooper said he “was thinking of such a fund in relation to eligible rollover funds (ERFs), which is a pretty unhappy sort of a sector at the moment.
“There have been far too many lost accounts and the fees being charged are far too high in a sector where people’s money goes that has been lost.”
“That might, therefore, be an area where it would make sense for the government to come in and do it on a very low-cost basis, with the motivation being to clean it up.”
“So if you thought that a (government-operated sector fund) may be a good idea, that may be where it starts.”
Cooper also said he would prefer fee structures that are easier to understand and compare, although he ruled out the government setting any fees and charges for funds.
“If superannuation can only cost a certain percentage per annum, what you'd find is the market would sit just below that percentage and would sort of cease to compete after that point.”
There should also be bigger and fewer funds in the sector, according to Cooper, who believes that the average fund size is “too small at just over $2 billion in a $1 trillion industry”.
However, he says there should not be a heavy-handed approach to bring about consolidation.
"It's about putting the spotlight on the issue and maybe some of the smaller funds at the tail-end will realise that they do have to merge.
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