Chant West has called on the Productivity Commission to better respond to what it sees as the two key issues with the superannuation industry uncovered by its investigation – those of there being too many people with unintended multiple accounts or defaulting into underperforming funds.
The research house didn’t believe that the proposed ‘top ten’ list of default funds was the best solution however, and said that commentary around the report had overlooked the significance of this change.
“Yes, we need a solution for the default fund when someone starts their first job, which is what the ‘best in show’ tries to deal with, but let’s agree to stop making new accounts by default and then work towards a solution for that first job,” Chant West’s head of research, Ian Fryer, said.
“Indeed … we should rather focus on getting rid of poor-performing and sub-scale funds and ending up with say 30 or 40 really good funds.”
Fryer said that the Australian Prudential Regulation Authority’s (APRA’s) proposed elevated outcomes test would push the industry down that path, calling on the Government to support this “as a matter of priority”.