Retail funds will struggle to be defaults
Retail superannuation funds may continue to struggle to be named as defaults, unless a broader assessment of measures is utilised, SuperRatings believes.
In a response to the Productivity Commission’s report on alternative default models, SuperRatings said the funds most likely to sit within the ‘List of 10’ default funds were industry super funds as they had the highest net investment returns over a 10-year period.
SuperRatings chief executive, Adam Gee, said: “Whilst we remain supportive of the Productivity Commission’s broader intentions, limiting a default list to only 10 funds will result in some outstanding value for money funds missing out on default fund status, which may sound the death knell for many of these, despite delivering excellent outcomes for their members”.
SuperRatings said a broad assessment of quality was required in order to select a default super fund.
It said the assessment should include a range of underlying metrics in respect of investments, fees, insurance, member servicing/advice, administration, and governance to ensure that every facet of a super fund’s offering could be appropriately interrogated.
The research house noted that the initial assessment criteria proposed by the Productivity Commission remained limited.
“The exclusion of insurance from the assessment is fraught with danger, given the important role it continues to play within superannuation and the community more broadly,” Gee said.
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