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Dangers lurk in MySuper
The Federal Government has been warned that extending MySuper beyond the core concepts of reducing fees and increasing efficiency risks institutionalising apathy and creating poor outcomes.
The warning is contained in a white paper developed by specialist consultancy Milliman, which also warns that naming the new arrangement ‘MySuper’ creates the impression of a tailored and recommended approach that may result in capturing members for whom MySuper “is neither intended nor optimal”.
The white paper said there was a risk that members without sufficient access to advice would accept MySuper as an appropriate and recommended retirement vehicle and not seek to validate it against other alternatives.
“The extension of the MySuper proposals into a whole of life product would potentially exacerbate this,” the Milliman white paper said.
It said that MySuper appeared to be caught in the middle of being a vehicle for the disengaged and a low-cost whole of life product and advice solution.
“It is our belief that focusing on levels of engagement as a means of designing retirement savings products is a blunt and inappropriate tool,” the white paper said.
“Whilst it is easier to institutionalise an approach that relies on disengagement, funds should concentrate on providing appropriate advice and increasing levels of engagement earlier within their membership,” it said.
The Milliman white paper was also scathing of the Government’s persistent tinkering with superannuation policy, which it said had made funds reluctant to develop post-retirement solutions for fear of potential changes that would make decisions and strategies redundant.
AUTHOR
Mike Taylor
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