Productivity Commission’s super proposal not enough
The Productivity Commission’s new proposals regarding the overhaul of superannuation default funds are not enough, according to Stockspot’s Fat Cat Funds analysis.
Although the study said the introduction of a top 10 ‘best performers’ list was a good idea, and it dealt to some extent with the “devastating effect high fees and poor performance” had on Australian’s retirement savings, it offered only a partial solution and could be even misleading in some cases.
According to Stockspot, fess and the asset mix should be used as the primary determining factors of default super fund choice, not just past performance.
Author of the Fat Cat Funds Report, Chris Brycki, said while the new proposed default system would help push towards past performing funds it unfortunately wouldn’t put any pressure on fees, which was a real problem.
As a result of this, fees would still consume a large percentage of gross returns across the board, he said.
“We urge the Productivity Commission to look to other jurisdictions like New Zealand, Chile and Sweden where super systems have established public tenders for the right to manage default pension funds,” he added.
“This has reduced average annual super fees to between 0.30 per cent and 0.55 per cent in those countries.
“In Australia, even default funds still charge double to triple this because of their risky active management strategies. If the government is serious about micro-economic reform then improving default super is the biggest opportunity this decade.”
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