Super Consumers Australia launches, slams MySuper products

New consumer group Super Consumers Australia has marked its launch with a swipe at MySuper products and the superannuation lobby.

The consumer group said its research shows the superannuation system "put over 170,000 people into a poor performing super product in 2017-18", which will cost them up to half a million dollars in retirement.

More than 176,000 new accounts were created in 2017-18 for MySuper products in the bottom 25% or "bottom quartile" of performers, it said.

These accounts join the more than one million total accounts already held in these "bottom of the barrel" MySuper products, according to SCA.

"These superannuation laggards continue to attract tens of thousands of new members each year through a badly designed default system," said Super Consumers Australia acting director Xavier O'Halloran.

He said the superannuation system is an "unlucky lottery" for too many Australians, a situation exacerbated by the industry resisting changes that would ensure people end up in better performing products.

"The Productivity Commission proposed a suite of options, including 'best in show', which would have the immediate effect of stopping more people's retirement savings ending up with products that would cost them in retirement," he said.

"It's an embarrassment that over 170,000 people are ending up in poor performing products with funds like BT, Mine Super and WA Local Government Super."

He added that the super system should put people into products that will leave them well off in retirement by default, and regulator need to take "real action" to weed out laggards.

"The regulators job will be made much easier if we stop growing underperforming products through a poorly designed default system," O'Halloran said.

Poorly performing MySuper products is not the only issue coming under the spotlight of the newly launched organisation.

It is also taking aim at the superannuation lobby, which SCA says is "using [our] retirement savings to lobby against [our] interests."

Formally launching today, Super Consumers Australia promises to "take on the $42 million super lobby and make sure you have an advocate looking out for your interests" said O'Halloran.

Super Consumers Australia at CHOICE is Australia's first dedicated and independent superannuation consumer advocacy organisation, established to "advance and protect the interests of people on low and middle incomes in Australia's superannuation system."

It aims to provide robust research, investigative journalism and policy development targeted at making the superannuation system "work better" for people.

It also wants to ensure the interests of consumers and fund members are put before the interests of shareholders and fund trustees in superannuation debates.

The initial focus of the five-person team, it said, is ensuring people do not end up in underperforming funds and improving the quality of life insurance policies offered through superannuation.

Australia currently has four major superannuation industry lobby groups representing fund trustees, with combined budgets in excess of $42 million, and employing more than 100 staff.

"There has been little dedicated consumer representation in superannuation policy for far too long," O'Halloran said, pointing to the Royal Commission, which noted the lack of dedicated voices to advocate on behalf of consumers navigating the complexity of the superannuation system.

The organisation is promising to "keep the industry on its toes": "Trustees need to be held accountable for decisions that end up costing members money," O'Halloran said.

A survey conducted by Super Consumers Australia showed that more than two thirds of people want an independent group that represents their rights.

Almost half believe superannuation funds hold the most power in the superannuation system, but 60% want that power to lie with consumers.

Research released by Rainmaker earlier this year shows that the long term impact on a member's retirement savings as a result of being in a high performing fund compared to being in a chronically low performing one can be almost $700,000 by the time they retire.

The SCC's research reminds why choosing the right fund and monitoring it at least once a year is so important, said Rainmaker executive director of research Alex Dunnin.

"But it should also be appreciated that some of funds identified as poor performers are actually designed for the purpose of stability and capital protection. Being a low performing fund doesn't always mean the fund is under performing," added Dunnin.

This SCC research highlights that super funds in this position need to do a much better job at explaining their narrative in this regard, he said.

Super Consumers Australia was formerly known as the Superannuation Consumers' Centre, which was formed in 2013 as a not-for-profit entity.

Read more: Super Consumers AustraliaMySuperSCACHOICEMine SuperProductivity CommissionRoyal CommissionWA Local Government SuperXavier O'HalloranAlex Dunnin
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