Default funds need focus

Most Australian superannuation fund members held firm to their existing funds despite the erosion of their returns through the global financial crisis (GFC), according to new research released by the Australian Institute of Superannuation Trustees (AIST).

The research, released today, was conducted by association professor Paul Gerrans of Edith Cowan University and looked at Australia's six largest super funds managing a combined total of $74 billion in assets.

It found that despite the investment reverses suffered as a result of the GFC, less than 6.5 per cent of pre-retirement savings were transferred during a three-year period to June, with most members remaining within a default option.

Commenting on the research outcome, AIST chief executive Fiona Reynolds said the results highlighted the need for funds to have a well-designed default option.

"Whether through apathy, lack of knowledge or reasoned choice, most super fund members appear likely to stick with the default super fund setting, which means it is absolutely critical that this setting is structured to deliver the best retirement outcome possible," she said.

Reynolds said the outcome made it imperative that the Cooper Review into superannuation looked closely at default fund options given their prevalence in the sector.