Superannuation funds need to do more to protect members from drops in the economic cycle, according to QSuper chief strategy officer Michael Pennisi.
During a panel session at the Actuaries Institute Financial Services Forum, Pennisi said that default funds are so heavily weighted towards equities that superannuation funds must consider implementing a different process to deliver a better outcome to members.
The answer to that problem was not only an investment issue, but needed to take into account contributions, longevity and insurance – all wrapped up in holistic advice, he said.
Pennisi said QSuper was considering introducing defined benefit thinking into an accumulation scheme to tackle the problem.
Defined benefit members did better than accumulation members during the GFC, he said.
According to QSuper member research, most members see default balanced funds as a recommendation, he said.
That challenged QSuper's board to think about whether they were delivering the best outcomes for members, Pennisi said.
"Members are seeking adequacy and are being conservative," he said.
Pennisi also argued that superannuation fund members did not care about their returns compared to other funds, and funds should not be wasting their time flaunting these.
"Members live and breathe by what we put into their accounts, so is the reason the industry is following each other a competition, or because we have the wrong objective?" he asked.
Members were fearful of whether they had enough money in their account, Pennisi said.
