Funds moved an inch, not a mile, on MySuper
Most superannuation funds simply rebranded existing balanced default options as their MySuper offering under MySuper changes, new research finds.
In a report titled ‘MySuper: A New Landscape for Default Superannuation Funds', Chant West and the Centre for International Finance and Regulation found most industry and public sector funds simply rebranded current funds instead of re-examining and re-shaping their default product offering, except for funds like QSuper.
Moreover, certain funds in the public sector that manage default money did not obtain a MySuper licence.
These funds, which were not Australian Prudential Regulation Authority-regulated, were located in South Australia, Western Australia and Tasmania.
"Overall we surmise that at least two-thirds of default funds by value and more than half by number underwent no meaningful change following the introduction of MySuper," the report said.
MySuper has also failed to bring about a range of simple, low cost, easy-to-compare default products, which was the original goal.
"If anything, the default landscape has become more complex rather than simpler," the authors said.
The launch of lifecycle products and other changes in product design have led to a more diverse array of offerings.
Retail funds, on the other hand, have jumped on the bandwagon by substantially changing their product offerings and lowering fees by 0.14 per cent.
Around 60 per cent of the sector adopted a lifecycle approach where investment risk is dialled down as the member moves towards retirement.
Retail funds have also moved towards passively managed products, with lower fees averaging 0.95 per cent per annum, and away from alternative assets.
"Whether these design changes are considered beneficial depends on one's view on debatable issues such as the trade-off between sequencing risk and expected return, active versus passive management, and the benefits of alternative assets," the report said.
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