The superannuation and insurance industries were having to fix up the complications created by the MySuper regime, including dealing with unintended consequences such as changes to fund risk profiles, a Super Review roundtable has been told.
The roundtable, held during last week’s Conference of Major Superannuation Funds (CMSF) was told by both Australian Institute of Superannuation Trustees (AIST) executive manager, policy and research David Haynes together with Energy Super chief executive, Robin Petrou that MySuper had generated significant unintended consequences.
Haynes said that there had been unintended consequences from MySuper where common fees and features had been required except where insurance was concerned.
“… and understandably funds have responded to that by creating more complicated insurance products with more features which have been both more expensive because of that and because of the hikes in premiums by insurers and re-insurers and therefore higher levels of fee and cover erosion which has seen more people lose significant benefits,” he said.
“The fact that insurance has become more expensive has had the unintended consequences of increasing fees – something we are seeking to address in insurance within super working groups.”
While not entirely disagreeing with Haynes, Petrou pointed to the impact of funds being forced to deliver default insurance to public offer members.
She said this had caused disruption to the risk file of super funds.
“We fought against APRA [the Australian Prudential Regulation Authority] changing the risk profile by giving default insurance cover to public offer people,” Petrou said.
She claimed it was something which not only changed the risk profile but meant that “people can now shop and take multiple policies out when they know things are coming”.