Australians must have online super comparison tool, says watchdog.
The financial services royal commission and the Productivity Commission (PC) have impressed on all Australians how much super could be lost through poorly performing super funds. And while we can head to comparison sites for information about everything from dog shampoo to best dishwashers, consumers are still drawing a blank in terms of an online comparison tool for superannuation.
Chief executive of the Australian Institute of Superannuation Trustees (AIST), Eva Scheerlinck, says anybody who has ever tried to compare the performance of their super fund with another fund knows this is a challenging and, all too often, fruitless exercise.
“Astoundingly, super funds aren’t required to provide simple, comparable information on the fees and returns of choice products, despite these products collectively managing more than $1 trillion of individuals’ savings – nearly double the amount of savings in default funds,” she told Fairfax Media.
She said the challenge was particularly acute for choice super products, where people’s funds end up if they leave their workplace default (MySuper) fund.
“While, as the name suggests, choice products are supposed to be for members who actively choose a super fund, we know that this often isn’t the case,” she said.
“In fact, so-called choice products allow some for-profit super providers to charge higher fees and provide lower returns outside the consumer protections that exist in the default system.
“When the Productivity Commission recently conducted an in-depth review of the super system, it found 36 per cent of choice super products in their sample underperformed return benchmarks. Almost all of these were offered by for-profit super funds.
“The commission also found that four million Australians were in high-fee funds. Again, almost all of these were choice products run by for-profit super funds.
“In other words, out of the estimated 40,000 super products available, some 10,000 or so could be duds, costing members many thousands of dollars in forgone retirement savings.”
Ms Scheerlinck says the AIST believes the Government must produce an online super comparator tool – using regulator-approved data – on an independent user-friendly website.
“This tool could then be used by anyone who wants to check on their fund, and consumers would be confident that the data was robust and independent, with the appropriate focus on long-term performance,” she said.
“What we all need and want from our super is the financial equivalent of an airplane flight that gets us from A to B – good net returns.
“The super system must provide an easy way for members to make a genuine choice about their super fund if they want to. In the 21st century, this shouldn’t be that difficult.”
Leading consumer advocacy group Choice has also decried the lack of action in creating a mechanism that clearly identifies the top performing funds.
“The Productivity Commission described these gaps as yawning, but six months on, we are still in the dark about which funds are the 29 ‘serial underperformers’ that are hinted at throughout their report,” Choice said in a statement.
“Both the Productivity Commission and royal commission … urged Parliament to stop allowing people to be defaulted into terrible funds, or multiple funds. This was pretty much the headline imperative of both.”
Choice said that prompt payment of super was another area that needed attention, pointing out that “employers have got up to four months to pay super, which means people are foregoing months of extra earnings on their contributions”.
Do you find it difficult to identify the top-performing super funds? Have you switched funds in the past 10 years?
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