Are 40,000 super investment options too many?
There are over 40,000 investment options available to members across the Australian superannuation industry — something which is driving complexity and cost, according to the Australian Prudential Regulation Authority (APRA).
The regulator has used its submission to the Productivity Commission inquiry into Superannuation Industry Competition and Competitiveness to argue that not only is there further scope for fund consolidation but also scope to simplify the investment options being made available to members.
"There are significant complexities in the superannuation system, with scope for efficiency to be enhanced through rationalisation or simplification in some areas, including in the range of products and options offered by RSEs [superannuation funds] to members," the submission said.
"For example, recent information reported to APRA indicates there are over 40,000 investment options made available across the industry. While these options are intended to cater to perceived or actual member demand, the operational and other complexities that arise from managing such a large number of investment options is material," it said.
The submission said the operational and other complexities were likely to lead to cumbersome and inefficient processes and significantly increased operational risks, "which may ultimately adversely impact all members of an RSE".
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