In two recent roundtables commissioned by State Street, 10 superannuation fund bosses discussed their frustrations with the implementation of the Government’s Stronger Super regime.
The CEOs were concerned that their focus was being distracted from more strategic issues that affect member returns.
In particular, REST chief executive Damian Hill said the processes involved in putting a MySuper product together was a drain on resources.
“We’re all spending a lot more money than we originally intended to, in many instances to make relatively
small changes to products,” he said.
Chief executive of industry fund TWUSUPER Debora Jackson expressed her concern that retail funds and banks would use their low-cost MySuper products to upsell their customers into more expensive products.
CareSuper chief executive Julie Lander agreed, and argued that there was nothing to stop banks from cross-subsidising its super fund business.
“For us [not-for-profit funds] money has to come out of the fund and be paid for by members while the bank has the ability to absorb those costs, especially promotion and distribution. This has not created any sort of level playing field at all,” she said.
Lander said that the MySuper products regulations would end up costing funds more – and those costs would ultimately flow through to members.
“Getting into the product space of MySuper is completely unnecessary. Why does [the Government] have to regulate what we offer as a product? Members will be worse off,” said Ms Lander.
Commonwealth Superannuation Corporation chief executive Peter Carrigy-Ryan was concerned by the requirement for board members to become more involved in the operational elements of their funds.
“I’m not sure that in the longer term this is going to be very positive … you want your board to focus on policy and strategy,” said Carrigy-Ryan.
But Mr Hill was more positive about the changes, saying they had forced boards to modernise and sharpen their skills.
