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MySuper and Choice product fees causing super inefficiency
The superannuation industry's efficiency can be improve by more consistent and meaningful consumer disclosure, together with strengthened conflict of interest management, according to the Australian Institute of Superannuation Trustees (AIST).
The AIST submission to the Productivity Commission's Super System Efficiency and Competitiveness review pointed to the lack of alignment between the disclosure of fees and costs between MySuper and Choice products as the cause of the system's inefficiency.
Commenting, AIST chief executive, Tom Garcia, said "In a compulsory super system, all super funds members — whether members of default funds or choice products — are entitled to expect that the system is operating at optimal efficiency".
The submission also said poor conflict of interest management and the negative impact of related party arrangements in the retail fund sector, were also barriers to efficiency.
Garcia said efficiency or competition measures should not come at the expense of robust consumer protection.
"Any new so-called efficiency measures must be evidenced-based and shown to improve long term net performance and the retirement outcomes for member," he said.
"Efficiency in a compulsory super system is not automatically solved by greater choice and competition."
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