MySuper could well result in Australian workers receiving lower superannuation payouts rather than the higher outcomes suggested by the Cooper Review, according to Sydney-based research house Chant West.
Chant West principal Warren Chant said that while the MySuper concept had a certain superficial appeal, it failed to recognise that there was a difference between price and value.
“In super, as with most things in life, you get what you pay for,” he said. “Sometimes it is better to pay a little more if that means the product performs better and lasts longer – and that’s what you want from super.”
Chant said the Cooper recommendations had treated superannuation as a homogenous product where the only differentiating factor was price – but that was not the reality.
“There are qualitative differences between funds. The better quality funds, in terms of investment performance, tend to have higher investment fees because of how they invest and what they invest in,” he said.
“But there is strong evidence that those higher investment fees pay off because they produce better returns,” Chant said. “In other words, the additional return is greater than the additional fee incurred to achieve it.”
He said that the forecast cost savings from MySuper were hugely optimistic, and were likely to be eclipsed by the reduction in benefits resulting from reduced returns.
