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Disengagement the big risk for MySuper: Chan & Naylor
MySuper will benefit people with small account balances, but it will also mean lower returns and increased disengagement for the majority of Australians, according to Chan & Naylor director Ken Raiss.
People with small amounts of money will benefit from the reduced costs and simplified administration of MySuper, said Raiss.
"You'll reduce costs, but you'll get lower returns because you won't be spending the time and effort at a financial planning level to identify the best spots to put those funds into," he said.
When people's account balances begin to rise, they may not be able to maximise their returns without the help of financial advice, Raiss added.
The other big problem with MySuper was that it would exacerbate the problem of disengagement with superannuation, he said. He said that in his experience as an accountant, few Australian know what their account balance is - let alone the investment strategy their fund takes.
"They don't even ask questions about the cost base that the providers are charging. It's almost 'It's not my money, why would I even look at it?'" he said.
People should be thinking about the sole purpose test and longevity risk, but the regulatory changes will encourage Australians to pay even less attention to their superannuation than they do now, Raiss said.
"MySuper will reduce costs - but what's the outcome going to be?" he asked.
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