Super competition challenges all

The challenges facing superannuation funds under the choice of fund regime are merely part of the ongoing tests the industry has been facing over the past decade through increased competition, according to Industry Fund Services executive chairman Garry Weaven.

For industry funds, Weaven admitted the Coalition’s choice of fund legislation has made this sector of the market more aware of competition, but insisted the pressures on industry funds pre-dated the choice regime.

Addressing delegates at a luncheon hosted by the Association of Superannuation Funds of Australia (ASFA) yesterday, Weaven said irrespective of ‘choice’, which comes into force on July 1 2005, industry funds have to rise to the challenge of an expanding market.

"Choice of legislation is really part of the continuing of increasing pressures in the superannuation industry in the last decade," Weaven said.

"As the honey pot has grown the number of bees around it has certainly multiplied," he added.

Weaven also pointed to the inclination of funds to chase "headline investments" and added that the pursuit of ratings in not the ‘be-all-and-end-all’.

Instead, Weaven argued the industry must focus on bolstering the net benefit to members and this could only be achieved through leadership and efforts to bring unit costs down.

"I don't believe on holding back on strategy or covering it up, because at the end of the day the only way the industry superannuation industry is going to prosper is through the emergence of truth in financial services,"

"Industry funds aren't beautiful, but they are cheap," Weaven said.