Industry funds urge comparability on member switching

The fees, costs and performance reporting of retail superannuation funds should be aligned with those of MySuper funds to provide greater transparency when members are switched into poor performing, high cost super products, according to the Australian Institute of Superannuation Trustees (AIST).

Reflecting concerns about members receiving advice to switch funds, the industry funds body has told the Australian Prudential Regulation Authority (APRA) that such a move represents an “important baseline issue so that prudential standards may work more effectively”.

“Without such alignment, APRA cannot easily identify, for example:

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• The poor value impact of conflicts of interest and other forms of misconduct on member retirement savings.

• Systemic switching of members into poor performing, high cost superannuation products.

• Whether investment performance is delivering fair value.”

Elsewhere in its submission to APRA, the AIST has pointed to issues raised before the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry around superannuation funds operating within vertically-integrated structures.

It said it believed prudential standards needed to aid meeting the members’ best interests test and noted the issues raised before the Royal Commission including:

• Conflicts arising from multiple directorships.

• Conflicts associated with related party arrangements.

• Conflicts arising from a responsiveness to shareholders as opposed to members of the superannuation fund.

• Conflicts arising from entities which are the trustees of an RSE as well as the RE of a managed investment scheme.

• How conduct which is deliberately not in members’ best interest is to be addressed.

 




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Yes, and HostPlus can explain how their high fee Balanced Super Fund consistently outperforms their low fee Index Balanced Fund. Get a life.

Hey Steve, that's because their default Balanced option is actually a 95/5 split High Growth option while the Index Balanced Option is a 75/25 split. Somehow the regulators allow them to continue with this naming convention.

To APRA & AIST, whilst you're about it, why don't you also declare the secret group life commissions paid to industry funds. Whilst you're about it, why don't you declare how much of members funds are siphoned off to pay for your compare the pair advertising.
Whilst you're about it, why don't the industry funds declare how much of member funds are siphoned off to sponsor various football teams around the country.

Finally, whilst you're about it, why don't the industry funds use current performance figures to show where member funds are invested and what they actually earned instead of hypothesizing projected real estate values without actually receiving any money.
Sounds like a level playing field to me.

Yes, it is interesting that the group insurance (MySuper) commissions paid to institutions are never disclosed anywhere. Funny how this was never raised at the Bank Royal Commission. High time to get a question asked about this issue in Parliament.

They can also have a look at Australian Super and most of the other industry funds that include franking credits as income which inflates their return numbers. Retail funds are honest and clarify this as tax refunded. Chant West and Super Rating have always turned a blind eye to this practice. Where is ASIC and APRA?

All these comments are good, but what can we do about it??

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