Forward forecasts better for superannuation
Specialist financial services software provider Provisio has this week released a white paper arguing strongly for superannuation funds to move away from past performance reporting towards future benefit analyses.
The white paper argues that superannuation fund reporting has changed little since the superannuation guarantee was introduced by the Hawke Labor Government, and that while it may be more regular and contain more market commentary, it is "still built around last year's performance because that is what's absolute and easy to measure".
The Provisio white paper argues that Australians are making superannuation investment choices based on the wrong information - and that this may increase the risk of making poor decisions and needless switching between investments or funds.
The white paper analysis claims that under existing practices, the future benefits of superannuation and its ability to support retirement are glossed over, "leaving Australians with little idea of what their compulsory savings might achieve in the form of retirement income".
"Communication of super's future benefit is a better approach," it said.
"Telling a member how they are tracking toward retirement, and what they can do to improve it, tells them what they can do to achieve the retirement lifestyle they want.
"If we want Australians to engage with their super, then we have to communicate the purpose of the whole exercise," the Provisio white paper said.
Commenting on the release of the white paper, Provisio director and co-founder Cameron O'Sullivan said short-term reporting encouraged knee-jerk reactions.
"We think that can cause bad decisions based on the wrong information," he said.
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