POWERED BY MOMENTUM MEDIA
(May-2002) More choice on the menu
Tasmania’s public sector super fund, the Retirement Benefits Fund board (RBF), heads the TOP 300 list of funds offering the most member investment choice with 12 options, including a socially responsible investment plan.
Next up are industry funds ASSET Super and REST and two corporates, the Master Superannuation Fund and the Westpac Staff Superannuation Plan, all of which offer nine investment choices, a figure that may also include their defined benefit plan.
Interestingly, all these funds have added new options within the last year, except for REST, which started giving members nine choices in July 1999.
RBF CEO Garry Fletcher says his fund had five choices up until October last year, when it added a further seven. While it may surprise some that a public sector fund tops the list, he notes that Tasmanian public sector employees have full access to choice-of-fund and that RBF competes for their membership without the capacity to compete in the open marketplace.
Fletcher says his fund’s growing menu is a win-win situation for all.
“The choice of products enables members to design retirement strategies that best suit their needs, but as they make use of these, they move money out of the defined-benefit fund, reducing the Government’s unfunded liability.”
Members of RBF can choose managers like Maple-Brown Abbott and the Bank of Ireland, which are not usually available to retail investors. But better still, they pay wholesale rates for these managers.
Similarly, ASSET Super increased the number of its options from six to nine in February this year. This followed its appointment of InTech as asset consultant, a move that allows it to offer InTech’s multi-manager unit trusts, which it has rebranded as its own, at industry fund rates.
“The MERs are very low and there are no adviser fees attached,” notes ASSET CEO Michael Dwyer.
Executives at the Master Superannuation Fund and Westpac Staff Superannuation Plan believe they have enough choice in place right now.
“If we added further choices, it would just be meaningless and confusing to members,” says Master Superannuation Fund secretary Mark Sladden.
REST, however, is poised to launch another three choices and RBF is currently considering additional property and fixed interest options.
As Fletcher notes, once the infrastructure is in place to add more options, it doesn’t cost much more to further increase the selection. Nonetheless, none of these funds are likely to try and match the vast number of choices offered by master trusts, which can sometimes approach 100.
Fletcher says: “I don’t think we need to go too far further. If you add too many choices, the decision making gets poorer.”
Dwyer adds: “Research shows that members can be swamped and potentially confused by 100 different options. Many people are probably better off with a few well constructed options that they understand as opposed to 100 options, which they may still struggle to come to grips with, even with advice.”
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