The Australian Institute of Superannuation Trustees have called on the incoming government to develop an online tool to help Australians make an informed choice about their super fund.
New research commissioned by AIST suggested that a large cohort of Australians are misinformed about their super fund performance and what type of fund they are in.
The research found retail fund members were typically confident in their savings decisions and their fund engagement with 69 per cent totally confident in making financial decisions and 61 per cent paying attention to their fund.
However, the research also found that over half of all respondents chose their employer default fund and then did not engage further with the fund.
One in four even mistakenly thought they were in an industry fund. Most people thought that super funds were all roughly the same, with 39 per cent believing most super funds charge the same fees and a further 30 per cent believing there was little return difference between the major funds.
AIST chief executive Eva Scheerlinck said it was almost impossible to compare funds in the non-default sector where there was almost twice as much savings under management.
“Many Australians are languishing in poorly-performing super funds with no easy way of knowing that their fund is a dud.
“In the 21st century, comparing super funds shouldn’t be that hard,” said Ms Scheerlinck.
The Productivity Commission found in their report earlier this year that millions of members were in persistently underperforming funds primarily in the for-profit retail sector.
These funds could cost a worker up to $400,000 over a full working life and Ms Scheerlinck said that Australian’s needed to have access to that information.
“In a compulsory super system, Australians should be able to access independent, reliable and easy-to-understand information to assist them in making informed choices,” Ms Scheerlinck said.
Those that fell into a non-default fund did not have access to a robust fund selection process said Ms Scheerlinck and the inability to directly compare funds was a growing issue.
“Right now, this isn’t possible, and we know this is a glaring failure of our system.”
Currently, there is a proposal for APRA to name the best and worse performing funds in a “best in show” list.
The Productivity Commission also recommended that all funds would display simple and comparable dashboards for all products with comparisons to a member’s current product along with the best in show shortlist.
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