Super product dashboards should be a “priority” for ASIC given the findings in the Productivity Commission's draft report on superannuation, says KPMG.
The Productivity Commission’s (PC) draft report on the efficiency and competitiveness of superannuation, released on Tuesday, was right to push for more mergers in order to "weed out" underperforming funds.
That's the view of KPMG head of asset and wealth management and former AWU national secretary Paul Howes, who predicted there will be "real pressure" on super funds with less than $1 billion under assets to merge with larger funds.
While he welcomed the PC's governance recommendations, Mr Howes – like much of the super industry – was cautious about the PC's proposal to create a 'best in show' shortlist of up to 10 default funds.
"I would query how potentially reducing the number of funds on offer will increase competition and the overall efficiency of the system – which is surely the key tenet of the PC’s review," he said.
"While individuals would still be able to choose any fund they like, in reality having such a list will drive most people to those funds only – why would most people go outside it?"
However, he recognised that some level of selection by employees "may be appropriate" – despite the high levels of disengagement when it comes to super.
For that reason, simple dashboards for super products are "essential" and should be a priority for ASIC, he said.
"Perfect should not be the enemy of the good here. Something is better than nothing," he said.
"Whilst solid and consistent returns have been a hallmark of Australia’s superannuation system, members are unaware of the systemic underperformance by some funds. Since members rarely question performance factors, the PC report reveals that funds are not taking the initiative to do better," Mr Howes said.
"Not doing better is no longer an option. The PC report should drive major changes in the industry. Shrewd fund trustees should not wait for the final report later this year but should respond to the clear lead given by this one," he said.
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