MySuper has put greater emphasis on the retirement outcomes, focused product providers on the needs of disengaged members and promoted widespread innovation, according to a new report by the Centre for International Finance and Regulation (CIFR).
Researchers from the CIFR conducted in-depth interviews with 28 executives from 20 Australian superannuation fund providers to investigate their response to the MySuper regulatory framework governing default retirement savings funds.
The key finding was that MySuper has encouraged product providers to separate default members out into a single product group, which had the effect of requiring providers to consider explicitly the needs of these members, and design a product accordingly.
"Most participants are approaching this task from the perspective that the typical default member is disengaged and probably poorly informed; and that it is their job to look after them. In other words, MySuper heightened the sense of fiduciary duty and paternalism towards this segment," the report said.
According to the report, allowing providers to choose product designs that they consider appropriate for default members is facilitating innovation, such as the emergence of a range of lifecycle funds.
"The potential for ongoing innovation is enhanced by perceived latitude to make changes to the MySuper product offering, without the need to secure explicit permission or convince members to make a choice. If this perceived latitude to innovate is combined with a genuine focus on member needs, then members should benefit," the report said.
However, executives' perceptions of the MySuper framework were not all positive. While some viewed MySuper as a catalyst for constructive change, others saw it as a waste of time and most considered it costly and disruptive.
"A large majority of our participants referred to the difficulties of implementing MySuper. Key concerns included: lack of initial clarity around the requirements; too many updates and changes; the timetable was too short; significant cost; and diversion of attention from managing for the benefit of members," said the report.