Calculator to put funds head to head
THE Australian Securities and Investments Commission (ASIC) has sent another strong signal that it plans to take a hands-on role to police the superannuation industry in the lead up to choice of fund, releasing a new calculator it believes will help consumers make better comparisons between funds.
The calculator, available on ASIC’s web site, allows consumers to pit two different funds against each other and compare them on features such as costs, fees and insurance premiums.
“You can now compare the costs of two funds side by side, and see the results in easy to read graphs. For a more complete picture, you can also put in yearly insurance premiums and take account of termination fees if you switch funds,” ASIC executive director of consumer protection Greg Tanzer said.
The calculator also allows users to check the effects of topping up super through after-tax contributions or salary sacrifice and the impact of the Federal Government’s co-contribution scheme.
An earlier version of the calculator had similar features, but did not allow comparisons between funds.
Tanzer said the new tool gives basic information about the “pure dollars” consumers can expect super funds to return, which he says is enough for some people to make decisions.
He added it was important for consumers to compare other features of super funds, including ancillary benefits such as life insurance.
“People should be looking at a wide range of issues particularly the investment strategy of the fund, rather than just the rates and fees, and look at how that fits in with their own strategy,” he said.
The release of the calculator is the latest in a series of measures by ASIC to protect consumers in the lead up to choice of fund, which include a surveillance program to investigate recommendations by financial advisers for clients to switch funds.
The corporate watchdog has also announced plans for a ‘shadow shopping’ survey — where it will send consumers to secretly approach financial advisers to obtain statements of advice — after choice takes effect.
Tanzer said ASIC encouraged consumers to seek advice if they were uncertain about their choice of super fund, but he added some people consider advice too expensive, while others prefer to make decisions based on their own research.
Tanzer noted that from July 1, 2005, regulations will require all super funds to refer to the regulator’s calculator in their product disclosure statements.
He said several product providers had already included references to the older version of the calculator on their web sites, and ASIC was encouraging industry to refer to the tool on web sites and in advertising materials.
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