Sticking with the existing default fund options and rebranding them as MySuper funds when the reforms are implemented may not be the best option for consumers, according to the chair of the Australian Centre for Financial Studies and non-executive director of Plum Financial Services Jeremy Duffield.
Speaking at an Australian Institute of Superannuation Trustees research symposium, Duffield used the release of a research paper on superannuation knowledge among consumers to question whether the existing default choices were the best ones to offer consumers.
"If we have illiterate consumers they are much more likely to get use of default choices, which may be good if the default choices are well-designed – but often they're not well designed, despite our best efforts," he said.
The introduction of MySuper is going to raise this issue again for consumers, Duffield said.
The research paper, released by Senior Visiting Fellow of the Australian School of Business, Dr Julie Agnew, found that many people are unaware of the finer details around super.
Thirty-eight per cent of respondents either thought there were no super contribution limits or didn't know. Twenty-eight per cent of people said super was taxed at a higher rate than other non-super investments, while 10 per cent didn't know.
If consumers don't understand the benefits and features of the superannuation plan they joined, then they won't be able to make the right investment decisions, Dr Agnew said.
Financial literacy is strongly related to how much wealth people have accumulated for retirement, and whether they have planned properly, she said.
The industry should be very wary of people's self-assessments of their knowledge, Dr Agnew warned.
Individuals might not be aware of what they don't know, she added.
