The superannuation sector, the trade unions and the Labor party vigorously oppose a government default fund that takes away money that currently flows into retail and industrial funds.
But some independent analysts support a government fund to reduce taxes, raise yields and reduce obvious conflicts of interest in private funds, where appropriate safeguards measures are introduced.
Public Service Model
Dr. Gruen, managing director of Lateral Economics and former economic advisor to labor treasurer John Dawkins, said it was "obvious" that people in super-government should have access to a fund management of low-cost and high-quality public assets, as public employees already do, to help level the playing field with super-profit funds.
of complex and misleading financial product marketing every Australian who wants to access those government services should be able to do so, not just a few select Ees government employees who are lucky enough, "he said.
" It is unfair and inefficient not to do it. "
A spokesperson for Industry Super Australia, representing industrial funds, drew up the idea.
" The temptation for politicians to use a single fund to pay for short-term policy corrections could be too big. "
" Putting all the super-savings of the nation into a fund, however well governed, would entail risks. "
Renewed Government Interest
The Turnbull Government considered a similar proposal about two years ago.
Government Minister Kelly O & # 39; Dwyer was a staunch supporter of the future Fund to which it is a mandate for consumers was given.At the time many retailers and some industrial funds failed to provide adequate returns for people's retirement and money managers were enriched by savings for the retirement of other people.
The Minister Finance Mathias Cormann opposed the proposal because it was similar to "super nationalization," according to a former member of the Turnbull government.
Government sources said the PC's exposure this week of industry failures and the royal commission they were catalysts for a renewed interest at the highest levels of government.The liberals recognize that the superannuation imposed by the government was not an adequate market fully functional or competitive.
Potential super-existing government entities include the sovereign wealth fund to manage public sector pension liabilities, known as the Future Fund, the Commonwealth Superannuation Corporation, which manages $ 47 billion in super for federal public servants and defense force personnel, or perhaps even state schemes like QSuper of the Queensland government.
The Productivity Commission stated that a state-owned fund should not be excluded from the option that new workers could be pushed towards a "best in show" list of 10 funds with the best performances, chosen by an expert group of financial regulators.
Treasurer Josh Frydenberg became interested in the PC noting that a government-owned fund could be included in the list of pre-defined funds, according to sources
He said this week the support of the Liberals "choice" in super, also through self-managed superannuation funds (SMSF).
The Productivity Commission Opposed
The commission refused a government "monopoly" fund that all workers would be automatically defaulted if they did not choose a fund, along the lines of what Mr. Costello and O & # 39; Dwyer.
Costello is president of Nine, editor of AFR Weekend .
The PC claimed that the greatest risk of all default contributions is to allocate to a state-owned fund was that in case of poor performance there could be significant political pressure on the government to "top up" returns for members and taxpayers could be put at risk.
A single default fund would fail to take advantage of the competition for better results from members, he said.
Brendan Coates, economic policy colleague of the think tank Grattan Institute, said that a government-owned fund is a reasonable option if commercial and trade funds do not agree  "As long as we have the right institution to do it and it's set up the right way," he said.
"You should manage expectations against the government that a yield guarantee intervenes in a phase of market downturn, but there is probably already an implicit public subscription of the large existing retail and industrial funds."
Canada, Sweden and many other countries provide a government default pension fund.
powerful by paying billions of dollars to super members, a government fund would have the political advantage for the liberals to slow down huge inflows to industrial funds that provide trade unions – and by extension the Labor party – on board, economic power and money  The industrial funds outperformed on average the retail funds for profit made by the banks, PMI and other commercial institutions, which have suffered enormous damage to the reputation and outflows of money due to the royal commission.
Sector pension funds are on track to overcome SMSFs will become the dominant players in the pension savings system within the next two years and are ready to exceed $ 1 trillion by 2024, according to financial adviser Rice Warner.
The situation is still very fluid and any government decision will be taken after the royal commission delivered its report to the government on February 1st.
Mr. Costello in 2017 expressed public support for the government has a more active role in managing the work pension in an economically more efficient manner than industrial and retail funds.
"This is my personal opinion: in place of the government that arbitrates between industrial funds and private funds, there is a right argument that the obligatory payments, the so-called default payments, should be assigned to an administrator of the national security network, let's call it the Super Guarantee Agency, "he said in October 2017.
" It would be a non-profit agency that would set up its own investment advice like the Canadian pension plan. ", he said, arguing that there would be" huge economies of scale "in the new agency.
The Future Fund has achieved above-average returns of 9.3% in 2017 -18 and 7.9% year-on-year since its launch in 2006.
While a government-owned fund appears to be in contrast with the free market ideology declared by the Liberal Party, because the over-foundation is forced by the government and some funds are offering poor returns for members, some on the conservative side of the policy believe that an injection of competition is justified low-cost and credible government.
If the option had been carried out before the election, whether the Future Fund or another public fund became a single fund for workers or simply an option for savers to opt for would need to be determined.
The Fondo Futuro, founded by Costello, invests to cover the unpaid cost of pensions for civil servants.
But currently it does not invest on behalf of retail investors and a move to allow this would mean a revolution in Australia's mandatory savings scheme.
The original principal fund of the Future Fund has grown to $ 149 billion.
The Futuro Fund also invests the activities of another four special purpose funds of public assets; the $ 14.6 billion DisabilityCare Australia fund, the $ 9.5 billion medical research fund, the $ 3.9 billion school investment fund and the $ 3.9 billion construction fund.
Sweden established a government-owned default regime in 1999 for individuals who did not choose a fund. Approximately 70 percent of new investors joined the fund, but in 2011 almost all new savers settled there.