When superannuation funds conduct their business performance review during March to May 2020, as per the new member outcomes requirement, they should not lose sight of considering their unique target member outcomes, Rice Warner believes.
In an analysis surrounding the new SIS Act requirements, the research house said the new member outcomes was the biggest game changer for trustees as it determined whether the financial interests of members who held each product offered by the fund were being promoted by the trustee, with specific reference to comparable products offered by other super funds.
“In assessing the outcomes achieved for members relative to the outcomes being achieved by other superannuation funds, trustees need to consider not whether the fund is doing the best it can by its members, but whether that best is good enough,” it said.
Rice Warner pointed to the fact that the Australian Prudential and Regulation Authority (APRA) clarified that they would initially focus on MySuper products with assessments on investment returns, fees and charges, sustainability, and in due course insurance.
“The initial exclusion of insurance may be frustrating given that the SIS Act requires trustees to benchmark the fund’s insurance offers against peers in the outcomes assessment, but highlights the lack of readily available data,” Rice Warner said.
“While we would agree that additional transparency regarding the performance of all superannuation funds is to be valued, we caution that funds should not lose sight of the need for the business performance review to consider the fund’s unique target member outcomes.
“This should not entrench any existing assessment of funds into league tables. Ultimately, the member outcomes process asks each fund to think critically about what outcomes the fund is aiming to achieve for its members and how the fund’s business plan supports this.”
Rice Warner said it was not a one size fits all approach in which all funds aimed to deliver the same outcomes and service proposition, and in which the only differentiating factors were having the lowest fees and the highest past investment performance.
“While these most recent announcements have delayed the implementation of member outcomes with respect to Choice products, we encourage funds to push on with their implementation of this new work,” it said.
“Many funds are well progressed and regardless of prudential and legislative delays have incorporated member outcomes into the current year business plan and will be assessing performance against target member outcomes throughout FY20.
“Once the marketplace has settled, we expect the bar will have been raised to acceptable levels throughout the industry, and the industry can move beyond all the recent criticism.”
The superannuation industry will be judged by its member services rather than how effectively it accumulates wealth, according to Stephen Jones.
The profit-to-member super funds are officially operating as a merged entity, set to serve over half a million members.
Super Review announced 21 winners at the annual Super Fund of the Year Awards, including the recipient of the prestigious Fund of the Year Award.
A research firm has given UniSuper a glowing review, praising its strong leadership and “compact team”, as well as its “creditable governance” structure.