The latest MetLife Super Review survey has revealed strong support for some fundamental changes to default superannuation funds under the modern awards regime.
Despite resistance indicated by a number of industry superannuation funds, most respondents to the latest MetLife/Super Review Super Outlook survey believe all MySuper funds should be eligible to be default funds under modern awards.
The survey – conducted during the recent Conference of Major Superannuation Funds (CMSF) conference in Brisbane – showed significant support for the Productivity Commission dropping the current arrangements around the selection of default funds under modern awards.
As well, the survey revealed only a narrow majority of respondents supporting the continued involvement of the industrial judiciary in the shape of Fair Work Australia from the default fund regime.
However, on the crucial question of whether all MySuper funds should be capable of selection as default funds under modern awards, 58 per cent of respondents indicated they were in favour of such an approach.
At the same time, only 54 per cent of respondents said they believed Fair Work Australia should remain involved in the default fund selection process.
On the broader question of the timing of introduction of the MySuper regime as part of the Government’s Stronger Super initiatives, a significant majority of respondents said they believed the policy should not be implemented until after the current Productivity Commission inquiry into default funds under modern awards.
The survey revealed 61.1 per cent of respondents were in favour of such a delay.
The Productivity Commission is expected to hand down its findings early in the second half of the year.
Superannuation fund stress test needed
Superannuation funds should be subjected to annual stress-testing to ensure they are maintaining adequate levels of liquidity, according to the results of the MetLife/Super Review Super Outlook survey.
In one of the strongest responses to an issue ever recorded, the survey revealed 87.3 per cent of respondents supported the implementation of such stress testing.
The survey revealed a strong majority of respondents (71 per cent) agreed that the outcome of that stress testing should be made public, particularly when funds failed to meet the requirements of the Australian Prudential Regulation Authority (APRA).
The question was asked against the background of APRA having acknowledged that a number of funds required supervision on liquidity through the global financial crisis, but those funds were not named.
The Government’s Stronger Super changes provide APRA with greater powers with respect to its monitoring of fund liquidity, but it is not expected to change its approach to the naming of funds.
Survey respondents find APRA data useful
Despite continuing questioning around the relevance of fund performance data produced by APRA, most respondents to the MetLife/Super Review survey still find the data useful.
Asked whether they found the APRA data useful, 84.1 per cent of respondents said that they did.
On the broader question of data provided by specialist superannuation fund ratings houses, respondents indicated they had mixed views about the ratings houses themselves, but found the data useful.
According to the survey, 77 per cent of respondents said they found that the data provided by specialist ratings houses such as SuperRatings and Chant West was useful.
However, on the question of which data they found most timely and useful, top marks went to SuperRatings, which gained the approval of 50 per cent of respondents, followed by APRA (34.1 per cent) and Chant West (4.0 per cent).
Industry split on super fund numbers
Just weeks ahead of the Government finally moving to allow Capital Gains Tax concessions with respect to superannuation fund mergers, the latest MetLife/Super Review survey found very mixed views around whether Australia needed fewer, but larger superannuation funds.
In what represented a distinct change in views from surveys conducted over the past three years and across a similar sample, the 2012 survey conducted during CMSF revealed only the narrowest of majorities for those supporting the notion of further fund mergers.
Asked if there should be fewer but larger superannuation funds in Australia, 49.2 per cent of respondents answered in the affirmative, while 47.6 per cent indicated they were opposed.
The same question asked in previous years elicited a much more decisive result in favour of further fund mergers and amalgamations.
Insurers must make claims handling a priority
Claims handling sits at the core of things life insurers need to get right when servicing the superannuation industry, according to the results of the latest MetLife/Super Review Super Outlook survey.
It revealed a solid 50 per cent of respondents nominating claims handling as the most important factor, followed by 45 per cent who nominated education and 23 per cent who nominated product design.
The survey also indicated a strong need for the provision of segmented, tailored advice with respect to products provided to the superannuation industry, with a hefty 60.4 per cent of respondents citing such advice as either “essential” or “very important”.
Nearly 60 per cent of respondents also voted for the promotion of additional cover.
