Any financial advice provided to superannuation fund members needs to be honest and objective with conflicts of interest disclosed, according to a new report prepared for the Chartered Financial Analysts (CFA) Institute by Mercer.
The report, which calls for the governance of pension plans to be independent from the Government and any employer control, also makes clear that while financial advice is important to overall outcomes for superannuation fund members, transparency sits at the heart of overall outcomes.
The report also strongly endorses the use of lifetime contribution caps as a means of helping superannuation fund members, including women with broken work patterns, to play catch-up.
"Community confidence in the pension system will be enhanced if the accrued benefits of members are protected from the financial consequences of fraud, significant mismanagement or employer insolvency," the report said but noted that such protection should not extend to market movements that affect the value of the member's benefit.
"Pension plans should also provide members with information and assistance about their personal situation," it said. "This can be through a range of approaches including web-based calculators with live data feeds, a call centre for advice, seminars and the provision of personal financial advice."
"Any financial advice provided by pension schemes, financial institutions or financial advisors must have a high level of integrity and professionalism," the report said. "The Statement of Investor Rights, prepared by the CFA Institute, contains several principles that are also applicable for pension scheme members. These include honesty, objective advice, fair treatment, the disclosure of conflicts of interest, clear communication as well as confidentiality."