Introduction and overview
This introduction presents an overview of the key concepts discussed in the subsequent chapters of this book. The book shows that Australia's retirees will be considerably poorer than they would have been if their contributions had been held in a single, passively managed fund. It explores the 'leakages' that have led to the shortfall, drawing on Australian and international literature. The book compares Australian funds with international counterparts, using detailed cost, performance and financial data at the fund level published by Australian Prudential Regulatory Authority. It focuses on some lessons that may be learned from the Australian experience. The book also explores the reasons for the relatively poor performance of Australian funds, attributing technical inefficiency to poor principal-agent relationships, weak governance, and lack of transparency. It sets the challenge of reducing complexity, controlling conflicts of interest and rent-seeking behaviour, and providing greater focus on outcomes for members, thus improving the efficiency of the industry.