Future Fund may leave workers with $124k less super – new report

Workers could be worse off at retirement if they were in the Future Fund rather than a top performing industry super fund, a new report finds.

The analysis by former Treasury official Phil Gallagher PSM, reveals a performance difference between average top quartile industry fund pension options and the Future Fund that could cost workers (earning $80,000 p.a.) 13.6 per cent of their retirement benefit, or $124,850 in real terms.

Average returns for 7 years to 30 Sept 2018

Impact on lifetime accumulation, single

Impact on lifetime accumulation, couple

Industry funds (top quartile balanced options)*


$124,850 more than Future Fund

$194,100 more than Future Fund

Future Fund


$124,850 less than top industry fund pension option

$194,100 less than top industry fund pension option

*Analysis based on industry super fund balanced pension options as published by SuperRatings. Balanced pension options were used because they have substantially similar asset allocation to industry fund balanced accumulation options and have similar tax treatment to the Future Fund.

The findings follow recent speculation that the Future Fund could be designated a public offer superannuation fund open to workers and employers as a default fund.

Industry Super Australia (ISA) chief executive, Bernie Dean, said Gallagher’s modelling showed the Future Fund was not a viable option for workers’ superannuation savings.

“We need to find ways of connecting workers with quality super funds, not find new ways for them to end up with less in their accounts,” said Dean.

“The extent of the loss calculated under the Future Fund scenario suggests ideology is blinding some to the best ways to put members’ interests first”.

“The Productivity Commission has ignored the evidence and recommended a flawed scheme, and, now, people are suggesting we consign workers to an underperforming government-run fund,” he said.

Gallagher, who spent 21 years leading Treasury’s Retirement Income Modelling unit, is now ISA’s Special Retirement Income Adviser. His analysis considers the Future Fund’s recent performance; compares it to the top quartile industry super funds balanced pension options over the past seven years; and models retirement savings from age thirty for almost forty years.

Modelling, including assumptions, attached below.

Bernie Dean is

/Public Release.