The online product dashboard for MySuper products must include an investment return target, the actual investment return, the level of risk and a comparison between the return target and the actual return.
But in a submission to the Australian Prudential Regulation Authority (APRA), AIST executive manager of policy, David Hynes, said the return target requirements could be manipulated unless “strict probability requirements” were put in place.
“If MySuper product dashboards are going to be truly comparable, then the investment return targets disclosed on product dashboards must be made by super fund trustees with a high degree of probability that they will actually be achieved,” said Mr Haynes.
The AIST submission proposed that target requirements should be made by trustees with a “high” probability of about 75 per cent.
The current requirement for a 50 per cent probability is not enough, said Mr Haynes.
The AIST submission pointed to an estimate by industry fund CBUS that found the difference between a 50 per cent probability target and a 75 per cent probability target is 2 per cent per annum.
“This is a huge difference in terms of both short- and long-term super fund performance and highlights how having a low probability factor in relation to return targets could easily be manipulated by under-performing funds,” said Mr Haynes.
The AIST submission also called for “comparability” between all superannuation products (ie, not just MySuper products) when it comes performance, fees and risk.
The AIST submission supported the use of a “representative member” in the comparison of funds, but argued that the representative member should have an account balance of $50,000 and a contribution of $5,000 during the period.
The product dashboard and associated reporting should be also renamed as a “measure of volatility”, the submission said.
