The Centre for International Finance and Regulation has released a new working paper titled MySuper: A Stage in an Evolutionary Process.
The paper, written by five academics, surveyed 28 superannuation fund executives from 20 different retail and not-for-profit funds.
A “large majority” of those interviewed referred to the difficulties involved in implementing MySuper.
Key concerns included a lack of initial clarity around the requirements; too many updates and changes; too short a timetable; significant cost; and a diversion of attention away from member benefits.
There was no consensus from the executives on whether MySuper was a positive or a negative development on balance, the paper found.
Participants said MySuper acted as a “catalyst for re-evaluation and change”, altered the competitive landscape and provided a “circuit-breaker” on peer comparisons (particularly for ‘lifecycle’ providers).
On the downside, the executives said there was an enhanced focus on fees and costs to the “detriment of members”.
MySuper has also “increased the underlying system costs at the margin due to to higher compliance burdens”, they said.
On the whole, the paper’s key finding relates to the “sense of purpose and motivation conveyed by the industry, which appears to be evolving towards a better alignment with perceived member interests”.
Business considerations such as performance or fees are described as either secondary or as “constraints” to addressing member needs, the paper said.
“The incentive to act in the best interests of members is further enhanced by the maturing of the superannuation system and increasing member age and balance,” said the paper.
The paper also found that executives are shifting their member communications away from ‘short-termism’ and towards reporting projected retirement outcomes.
