Up to 10 per cent of Australians will change super funds by June 30, 2006 according to super clearing house provider InvestmentLink, demonstrating that super choice is proving more popular than forecast.
Following an analysis of the 1 million active accounts it administers on behalf of member funds, InvestmentLink also found that consumers moving funds are being influenced by brand power, the desire to consolidate super balances, and changes in employment.
The research shows that industry funds have taken out five of the top 10 choice destinations, with new providers such as Virgin also moving onto the top 50 list.
“Their marketing focus and consumer loyalty across a range of products . . . have in our opinion contributed to their apparent ease in attracting new members,” the report said.
Individuals consolidating their pension monies are more likely to use a previously established retail or industry account, rather than set up a new fund from scratch.
Only 3 per cent of destination funds under choice are self-managed superannuation funds (SMSF). The report notes: “The vast majority of SMSF transactions represented a redirection into a previously established SMSF, rather than the ‘much-hyped’ establishment of a new SMSF in response to the choice of funds opportunity.”
InvestmentLink also said that workforce turnover could “drive choice to over 50 per cent in a few years”. Its research shows that employees who have recently changed jobs use the opportunity to consolidate all their pension accounts.
This could have “profound implications for existing industry structures such as automatic insurance acceptance which rely on 70 per cent or more of employees belonging to the default fund” the report notes.
