The default fund deals with the greatest number of people, it deals with the people who appear unlikely to make a change and its asset allocation fundamentally influences their retirement outcome. More than 80 per cent of super fund members are in a default fund. In the case of many not-for-profit funds, this figure is as high as 95 per cent. It may be that more funds will consider age-based ‘triggers’ to encourage their default members to seek advice or at least review their current position. Or it may be that funds introduce age-based defaults or move away from a single default option. The propensity to stick with the default fund also raises questions about MIC. While the average number of investment options among not-for-profit funds is less than 10, some retail funds have more than 100 investment options on offer.

Given that few members actively structure their superannuation to their needs, is it necessary to have so much choice? And who is actually paying for that choice? Moreover, there is a lot of evidence to suggest that individuals do not always act rationally when making financial decisions. Already one large industry fund has moved to reduce the number of investment options on offer to its members. It is also reviewing the labelling of its investment options to ensure they convey the right message to members about risk and expectation. Having survived the biggest financial disaster of our generation, the super industry can move forward with some certainty that members aren’t easily panicked and the default fund will be ‘home’ to most. But more work needs to be done to ensure that the default fund option does indeed remain sweet for the long haul.

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