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The peak representative body for the profit-to-member superannuation sector, the Australian Institute of Superannuation Trustees (AIST) said today it anticipated working closely with the newly-formed Choice body, Super Consumers Australia, to ensure consumer interests were protected in superannuation.
AIST CEO Eva Scheerlinck said AIST had a long history of successfully advocating on behalf of members’ best interests, including advocating for much-needed financial advice reforms, an enhanced default system, improved consumer disclosure, and a better deal from our super system for women and low-income earners. AIST has also been vocal in calling for greater regulatory focus on underperformance across the super sector and for the advent of a tool to help members compare funds.
“We look forward to working with Super Consumers Australia because our focus has always been to deliver the best outcomes for superannuation members,” Ms Scheerlinck said. “Profit-to-member funds are structured in a way that puts members’ interests front and centre. Unlike bank-owned super funds and other for-profit providers, profit-to-member super funds do not return profits to commercial shareholders and have a non-conflicted governance structure – both key reasons why the profit-to-member sector has delivered outstanding returns for members for more than two decades.”
Noting comments today from Super Consumers Australia about underperformance in superannuation, Ms Scheerlinck said underperformance needed to be addressed across the whole super sector, not just MySuper, where returns, on average, were much higher than the non-default sector.
Rice Warner Research commissioned by AIST in 2018, forecast that collectively, Australian workers who stay in in non-default (Choice) funds could be as much as $52.5 billion worse off in a decade’s time. Individually, members who remained in underperforming Choice funds could be as much as $50,000 worse of on average.
“In a compulsory super system, long term underperformance by any fund is unacceptable. While the regulator’s recent move to examine underperformance in the MySuper is welcome, the millions of consumers who are being ripped off by high fees and poor performance are in danger of being ignored. Extending regulatory focus to the non-default (Choice) sector, where underperformance is endemic, must not be delayed.”
In a report released in January, the Productivity Commission estimated that more than one third of products in the non-default sector, were underperforming. Almost all funds found to be underperforming in the Commission’s sample survey of Choice products were retail bank or insurance-owned super funds. There is significantly more super invested in the Choice sector (about $1 trillion) than in the more highly-regulated default sector ($600 billion).
Media contact: Janet de Silva 0448 000 499
25 September 2019