In one of the first submissions to the Retirement Income Review, the body for private market investors has urged the government to focus less on fees and consider the place for illiquid assets in MySuper.
Citing APRA's heat maps as an example, the Australian Investment Council (formerly AVCAL) said that policy makers and regulators have focused discussions around inefficiencies in super fund performance on fees and costs, instead of after-fees returns.
AIC is recommending the government enhance policy settings, including disclosure requirements for superannuation funds that encourages members to focus on their net retirement income, rather than fees.
"The Council is supportive of initiatives that increase efficiencies, such as consolidation of underperforming funds," the AIC said in its submission.
"However, a narrow focus on fees and costs and promoting these as the key drivers of superannuation outcomes is misguided and is likely to ultimately lead to lower superannuation balances in retirement."
AIC also says that illiquid exposures have been a casualty of the increased focus on the liquidity in superannuation.
"An unintended consequence of policy and regulatory changes in recent years is an increased (and problematic) focus on highly liquid, low-cost investment products in default superannuation funds and the implied need for superannuation funds to increase liquid holdings."
"Drivers of this include being able to facilitate the quick transfer of member funds between investment (and fund) options and the motivation to reduce headline fees. This has increased the weighting of superannuation funds to certain asset classes over others - such as listed equities and fixed income products."
It wants the government to consider how it can balance the need for low-cost, liquid investments with longer-term investment options, with the view of benefiting members and the nation.