Too many super fund choices are leaving Australians confused and unable to make informed decisions around which superannuation options will be right for their finances.
According to a new survey of 1000 Australians, conducted in October 2017 by UMR on behalf of Industry Super Australia:
- 63% of respondents believe the range of superannuation products available makes it harder to decide which product is right for people like them.
- 63% of respondents said that Australian banks have a track record of offering a variety of financial products designed to make it hard to get a clear idea of which products are right for them.
- 67% of Millennials surveyed said that variety makes it harder to choose the right superannuation product, compared with 58% of Baby Boomers.
- 67% of Baby Boomers surveyed and 66% of men surveyed said that the banks use detail on financial products to confuse.
According to ISA analysis of APRA data to 30 June 2016, the Big Four banks, Macquarie and AMP collectively offer approximately 22,000 superannuation investment options. In comparison, industry super funds collectively offer approximately 660 investment options. According to ISA, these industry funds have outperformed bank-owned and retail-super funds by an average of 2% over the last decade.
ISA chief executive, David Whiteley, accused banks and retail funds of deliberately strategising to overload consumers with choices:
“Just as we’re seeing in private health insurance, the proliferation of super product options is muddying the waters.”
“The big banks’ business model is designed to sell products to consumers to make a profit. It would appear this has led to an explosion of product options in super, many of which perform poorly and leave members worse off.”
My Whiteley also criticised the government’s regulation of these bank business strategies, including a decision to defer a requirement for ‘Choice’ products (of which 83% of bank-owned and retail super fund assets are held) to provide consumers with easy-to-read product dashboards until at least 2019.
“Rather than clamping down on these types of bank business strategies, the government appears to be facilitating them.”