A whopping 50% of all Aussies let others pick their super funds for them, Mozo survey reveals.

A roulette wheel with ball bouncing around.

Designing a comfortable retirement relies on various factors, including anticipating future needs, making adequate savings, and choosing the right super fund. Ultimately, you seek a fund that aligns with your investment values and offers good net returns after fees are factored in.

What constitutes a 'good return' may vary, but what remains constant is the need for active participation in your investments. Ideally, you've chosen your super funds through a clear and level-headed assessment of the options.

Unfortunately, reality often diverges from this ideal. Our 2024 Mozo Super Insights Survey* reveals a startling truth: 50% of the population allows someone else to decide where to stash their funds, citing they got it with their first job.

This trend stems from the standard practice where employers must designate a default fund if employees don't make a choice themselves. Consequently, funds sit (and hopefully grow), with minimal input from the user.

“When starting out in the workforce it's easy for people to think that ‘where should we pay your super’ is just another admin question like ‘where should we pay your wages’. But it is so much more than that, because it impacts on your long term financial situation.”, said Mozo superannuation expert AJ Duncanson.

It's worth noting that not all of these Aussies are oblivious to their superannuation situation, and it doesn’t necessarily mean they haven’t compared options. Some of those with employer-chosen funds may find themselves happy with the choice after comparing options more deeply (I’m one of them). 

And then there’s the other half who have stated that they’ve compared funds and made their choice based on factors like best returns (14%), recommendations (12%) lowest fees (9%), ethical reasons (5%) and other considerations.

However, with 31% expressing uncertainty about their retirement savings and 1 in 5 admitting to never comparing options, it's evident that there's room for improvement.

How Aussies ended up with their current funds

Pie chart breaking showing the various ways Aussies have ended up with their current super fund.
Source: 2024 Mozo Super Insights Survey, n=2554

How default super funds are currently ‘assigned’

Starting a new job, whether it's your first foray into the workforce or a shift in career paths, typically entails entering into the default superannuation fund chosen by your employer. This choice is often made without much input from you, the employee, and could stem from various reasons—perhaps the employer believes it's a solid option, or maybe it's just the path of least resistance. Regardless, this default fund becomes the destination for your super contributions unless you actively opt for a different fund.

In this scenario, if you fail to select an alternative fund (maybe due to forgetting paperwork during a job change or simply being unfamiliar with the process as a new hire), your contributions will be automatically funnelled into one of the investment options offered by the default fund. While the introduction of MySuper in 2015 by the government aimed to ensure that default funds didn't erode your balance with excessive fees, the fundamental setup remained largely unchanged.

Even with the MySuper reforms, the onus still largely falls on you, the individual, to take a proactive role in managing your superannuation. Without active engagement and effort on your part, your super contributions may continue to languish in default options without being tailored to your specific financial goals and needs.

Encouraging active engagement in superannuation

Ensuring Australians take an active role in managing their superannuation is vital for securing their financial future and the future of Australia as a whole. So how can we do it? A collaborative approach involving the government, employers, the industry and individuals would be most effective. 

Enhanced employer support

Employers could offer a broader range of super fund options and provide employees with accessible educational resources. This would empower individuals to make informed choices tailored to their needs.

Government intervention

Encouraging Australians to take a more active role in their superannuation can begin with simple, practical measures. For example, the government could implement policies that prompt employees to actively select a super fund within a specified timeframe or sign a waiver indicating they've reviewed their options and are OK with the employer’s choice of funds. 

Simultaneously, raising awareness about the importance of superannuation on a national scale is essential. By simplifying complex concepts and highlighting the long-term benefits of proactive involvement, nationwide campaigns can inspire individuals to take ownership of their financial futures.

Furthermore, involving professionals like accountants and financial planners in educating their clients about superannuation options could significantly enhance financial literacy. By providing incentives for these experts to offer guidance and support, more Australians can make informed decisions tailored to their needs and aspirations.

Industry initiatives

It's clear that the superannuation industry has a stake in ensuring individuals are actively engaged with their retirement savings. Funds with competitive returns, low fees, and ethical investment practices can significantly benefit from proactive marketing efforts. 

By effectively communicating their advantages, these play a part in educating the population while also gaining new members. This not only enhances competition within the industry but also contributes to better retirement outcomes for individuals.

Personal empowerment

While external factors can play a role, ultimately, the responsibility falls on you. Have you taken the time to compare your superannuation options recently? Do you know the type of fund you're in and how it stacks up in terms of fees, returns and alignment with your values? If you're unsure about these questions, now is the time to take action.

‘The sooner you act, the better chance you have of being financially comfortable down the track. A little investment of your time now could reap big returns in retirement.’, said Mozo superannuation expert AJ Duncanson.

So, if you've made it this far, consider this your prompt to take a moment and review your superannuation situation. Start by comparing different funds and assessing which one best suits your needs and goals. 

Your future self will thank you for taking an active role in deciding where your retirement funds are invested.

Mozo.com.au commissioned a nationally representative consumer research survey via Researchify, surveying 2,554 Australians, aged 18 years and over, from 12th January to 2nd February 2024