Superannuation funds are focussing on appearing favourable compared to competitors rather than on long term returns for members, CPA Australia has claimed.
CPA Australia made the claim in a submission to the Productivity Commission inquiry into superannuation competition and efficiency.
“Many superannuation funds appear to be constructing and managing their asset allocations so they can be compared against their peers on ‘league tables’, creating a focus on short-term investment performance to the possible detriment of long-term retirement outcomes for their members,” says the CPA Australia submission.
“Similarly, focussing on fund mergers achieving economies of scale may not be in members’ best interests when many small funds have unique features or membership profiles and they may be able to achieve scale in other ways, such as pooling administrative services or investments with other funds.”
CPA Australia says that the recommendations of the inquiry should encourage greater competition, but warns the Productivity Commission that this “may lead to some funds focussing on attracting or retaining fund members rather than pursuing outcomes that are in their members’ best interests”.
The submission also says the Commission should consider the “fees to the various service providers along the supply chain”, including administrators, custodians, insures and investment managers.
“The variety of non-core services provided by superannuation funds, such as banking, insurance and health insurance, and their impact on members satisfying their retirement savings needs,” is another area of concern for CPA Australia.