Australia's cumbersome superannuation system would only take a few years to clean up, but limiting automatic consolidation to balances above a certain size was not the answer, former Super System Review chair Jeremy Cooper said yesterday.
Cooper, who is now Challenger's retirement income chairman, said excess accounts in the super system needed to be dealt with.
"The fact that there are three times the number of accounts as there are human beings in the system tells you that," he said.
Some auto-consolidation critics have said many investors hold excess accounts, not by accident but by design, because the sum total of the funds' insurance offerings made for adequate life and disability insurance coverage.
However, Cooper said the number of people who intentionally held more than one super account was minimal. He said the heart of the matter was there were far too many funds weighing on the system.
"It's like the Augean stables; it needs a good clean-out," he said, referring to a Greek myth that has come to mean a large, onerous task begging for attention.
He said restricting automatic consolidation to balances above $1000 was not the answer, a proposal advocated by some members of the Stronger Super working group.
"Rather than setting up little pockets and little barriers and little rules, if auto-consolidation is a good idea - and most people believe it is - let's get on with it," he said.
Asked how long it would take to get the bulk of the job done, he said: "I would think that within a couple of years you'd see a pretty substantial difference.
"You can foresee a situation when, over time, when there's better data and better awareness and bigger balances, auto-consolidation would have much less of a role to play than it does now."
