ALMOST half a million people will change superannuation funds under impending choice of fund legislation, but mis-selling by financial advisers could undermine the effort to give people more control over their retirement savings, according to the peak industry body for the superannuation industry.
New research released by the Association of Superannuation Funds of Australia (ASFA) revealed that 8 per cent, or almost 500,000, of those eligible to determine their own super fund will opt to do so, which suggested close to $50 billion in super monies would change hands over time.
The findings led ASFA to reiterate its concern over the potential for mis-selling by advisers, particularly in regard to self-managed superannuation funds (SMSFs).
“The biggest risk appears to be advisers mis-selling people into self-managed super fund arrangements where the client involved doesn’t have the skills, time or adequate savings to make this viable… Fortunately most instances of mis-selling so far seem to be isolated cases driven by individual advisers, not co-ordinated marketing campaigns by financial institutions,” ASFA chief executive Philippa Smith said.
In its report on the research, ASFA projected 5.7 million individuals would have the legal right to decide on their own super fund — with some 456,000 exercising that right.
According to fund member data used in the survey, choice of fund will lead to around 6 per cent of members not only changing funds, but also changing the type of fund they use, with SMSFs expected to gain at the expense of retail funds.
ASFA principal researcher Ross Clare said that a higher proportion of retail fund members plan to change funds, for a variety of reasons, ranging from fund performance to fee levels.
However, the movement of retail members to SMSFs will be offset somewhat by the continued closure of corporate super funds into either retail or industry fund vehicles, Clare added.
