Chant West has called on the Productivity Commission to better respond to what it sees as the two key issues with the superannuation industry uncovered by its investigation – those of there being too many people with unintended multiple accounts or defaulting into underperforming funds.
The research house didn’t believe that the proposed ‘top ten’ list of default funds was the best solution however, and said that commentary around the report had overlooked the significance of this change.
“Yes, we need a solution for the default fund when someone starts their first job, which is what the ‘best in show’ tries to deal with, but let’s agree to stop making new accounts by default and then work towards a solution for that first job,” Chant West’s head of research, Ian Fryer, said.
“Indeed … we should rather focus on getting rid of poor-performing and sub-scale funds and ending up with say 30 or 40 really good funds.”
Fryer said that the Australian Prudential Regulation Authority’s (APRA’s) proposed elevated outcomes test would push the industry down that path, calling on the Government to support this “as a matter of priority”.
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 Coalition, which has pledged to reverse any changes if it wins next year’s election.
In a new review of the country’s largest fund, a research house says it’s well placed to deliver attractive returns despite challenges.
Chant West analysis suggests super could be well placed to deliver a double-digit result by the end of the calendar year.
Specific valuation decisions made by the $88 billion fund at the beginning of the pandemic were “not adequate for the deteriorating market conditions”, according to the prudential regulator.