Former Liberal treasurer Peter Costello wants Australian workers' default superannuation payments to be better protected.

Mr Costello, chair of Australia's sovereign wealth fund, the Future Fund, has suggested a new nationally administered “safety net” fund to manage payments.

Mr Costello said most Australian workers do not bother to choose a super fund, so they are usually lumped into a default scheme.

“Instead of the government arbitrating between industry funds and private funds, there is a fair argument that compulsory payments, the so-called default payments, should be allocated to a national safety net administrator,” he said.

“Default contributions are at the moment spread between many funds, allocated to many different products, many of whom use the same manager and all of whom pay fees to do so.”

Former Treasury economist Warren Hogan said centralising the default payment allocation of Australians' near $600 billion of super is a strong idea.

“I think you could argue the Future Fund, of which of course Mr Costello is very familiar, is run efficiently and effectively, then you would save those people a lot of money,” Mr Hogan said.

“You're talking hundreds of millions of dollars, if not billions, in any given 10-year period.”

A not-for-profit agency would see superannuates would pay less fees and accrue more money.

“There is some real merit to this, and obviously the Productivity Commission is looking closely at it,” Mr Hogan said.

“This is just for the money that is what you could almost say is lazy money — money that just defaults into a fund and people aren't really managing it actively or looking at it closely.

“This does represent a significant threat though, because that would be a major, major proportion of super money that would be taken out of these existing managers and put into this government fund.”

Private sector fund managers warned that the idea is far too risky.

“I think it's very dangerous just to put all money into one fund. I think the current arrangement is actually quite a sensible one,” said Shane Oliver, the head of investment strategy at AMP Capital.

“The defaults aren't as simple as they used to be but many fund managers are offering funds targeted at people by their age group.”