Are MySuper options really safer than choice?

18 September 2018
| By Mike |
image
image
expand image

MySuper may have been introduced as a low-cost option for disengaged members but, according to new research, it has emerged as a much better bet than most so-called “choice funds”.

According to research commissioned by the Australian Institute of Superannuation Trustees (AIST) and carried out by actuarial research house, Rice Warner, if all members of Australian Prudential Regulation Authority (APRA)-regulated funds had fees and returns consistent with the average MySuper product, super assets would be $52.5 billion high in (today’s dollars) in a decade’s time.

The research – which used past performance data of both sectors to forecast retirement outcomes in a decade’s time by 2027 – suggests that individual members who remain in underperforming Choice products could be as much as $50,000 worse off at retirement compared with those who invest their super in a MySuper fund.

Commenting on the research results, AIST chief executive, Eva Scheerlinck said the findings were timely given the damning evidence out of the Royal Commission about bank and insurance super funds, where most members were in poorly performing funds outside of the more highly-regulated MySuper sector.

“The time has come for every Australian to carefully examine their super and consider the long-term benefits of investing in a good value, high performing, not-for-profit MySuper fund,” Scheerlinck said.

“While investing in more defensive assets might be a valid reason to choose product other than MySuper, the Royal Commission has shown us that many people who choose their super fund end up in poor performing bank-owned super funds because of conflicted financial advice,” she said.

Rice Warner chief executive, Michael Rice said the results suggested those who made a choice to invest their super outside of the MySuper sector were likely to experience a worse outcome.

“There is a general view that members who choose to invest their super outside MySuper products should achieve a better outcome as they are tailoring their investment decisions to their personal circumstances and financial goals,” Rice said. “However, our research shows that well managed MySuper products with low fees are likely to deliver better outcomes for members over the long run.”

Read more about:

AUTHOR

Submitted by I give up on Tue, 09/18/2018 - 14:28

OMG. What a lot of hogwash. Surely there has to be some responsibility to report the truth?

Recommended for you

sub-bgsidebar subscription

Never miss the latest developments in Super Review! Anytime, Anywhere!

Grant Banner

From my perspective, 40- 50% of people are likely going to be deeply unhappy about how long they actually live. ...

11 months ago
Kevin Gorman

Super director remuneration ...

11 months 1 week ago
Anthony Asher

No doubt true, but most of it is still because over 45’s have been upgrading their houses with 30 year mortgages. Money ...

11 months 1 week ago

Jim Chalmers has defended changes to the Future Fund’s mandate, referring to himself as a “big supporter” of the sovereign wealth fund, amid fierce opposition from the Co...

1 day 14 hours ago

Demand from institutional investors was the main driver of growth in Australia’s responsible investment (RI) market in 2023, as the industry continued to gain momentum....

1 day 14 hours ago

In a new review of the country’s largest fund, a research house says it’s well placed to deliver attractive returns despite challenges....

1 day 15 hours ago