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Better default funds will engage members
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| Russell Clarke
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Efforts to engage super fund members with their superannuation are not working, and super fund managers need to create more appropriate default super funds in response to the problem, according to the chief investment officer of Mercer, Russell Clarke.
Speaking to Super Review, Clarke said that the reality of the choice regime is that despite efforts to educate members about investment options, 95 per cent of super members are still unengaged with their super — and it is up to the fund managers to come up with a better solution.
“We keep trying to engage people, but the reality is that a lot of young people don’t have a lot of interest in it,” he said.
Clarke said fund managers should create more appropriate default super funds that would roll super fund members through progressively defensive investment options as they aged, rather than a “standard fixed asset allocation applied to individuals at all times”.
“It would be better to build a more granular solution that looks at individuals as they age,” he said.
Clarke said that the default option for most super funds in the country looked broadly similar, with about 70 per cent in growth assets.
“For the average person it’s about right, but the reality is that … you have a whole range of people who are at different ages. So it’s a good solution for the average person, but it’s not a good solution for any particular individual,” he said.
“Given that people are not making those decisions, or don’t have an interest, or are apathetic … we are trying to come up with a better default [super fund] so that people’s ‘whole of life’ needs are looked after better,” he said.
AUTHOR
Mike Taylor
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