Many retail super fund members are misinformed about their super funds, and they don’t know it, research released by AIST has revealed.
The research, commissioned by the Australian Institute of Superannuation Trustees, found a “high level of confusion” amongst retail super fund members. While many retail fund members were confident, what many of them thought they knew was incorrect.
The research found that members felt confidence and in control. Retail super fund members were confident (69%) in making financial decisions, including which super fund would be best. 61% said they payed a ‘lot’ or a ‘fair amount’ of attention to their super fund.
However this confidence was found to be misplaced. Only 46% thought their super fund was a retail fund, with 27% unsure, and 19% thinking it was an industry fund. Also around a third of people who were very confident in making financial decisions and paid a lot of attention to their super thought their (retail) fund was an industry fund.
Many of the respondents got facts about industry and retail funds wrong. 18% thought that retail funds didn’t need to pay some of their profits to shareholders. 47% thought people had to work in a specific industry to be a member of an industry fund.
65% thought their retail fund returned about the same as the industry average, with 22% thinking their fund had better returns. The Productivity Commission found that not-for-profit super funds had “systematically outperformed retail funds”, by almost 2% over a 13 year period. Though underperforming funds were not confined to only retail fund.
AIST is using the research to argue for the Government to create an online tool to help people compare super funds. AIST CEO Eva Scheerlinck said that while standardised reporting was already required for MySuper default funds, it was difficult, “if not impossible”, to compare Choice funds.
In April, ASIC further delayed the introduction of product dashboards for Choice products until as far out as July 2023, blaming a lack of regulations from the Government.
“Many Australians are languishing in poorly-performing super funds with no easy way of knowing that their fund is a dud,” said Scheerlinck.
“In the 21st century, comparing super funds shouldn’t be that hard.”
“In a compulsory super system, Australians should be able to access independent, reliable and easy-to-understand information to assist them in making informed choices. Right now, this isn’t possible, and we know this is a glaring failure of our system.”
Such a Government initiative appears to have support from the retail fund members involved in the research. 73% support all super funds being required to have standardised fact sheets, allowing easy comparison between funds. 71% support a government agency, such as the ATO, creating a comparison website for super funds. 70% support a government agency releasing an official list of the ten best performing super funds annually.
The research was conducted by Essential Research, and involved focus groups and a survey of 529 people who identified themselves as retail fund members.