Yet despite this consistent flow of educative information, about eight out of every 10 members of most funds remain in the “default” or “balanced” option. Have they chosen to do so? We do not believe it should be assumed that every member of a default fund is simply disengaged and would be better off with a stripped-down default fund as envisaged in the preliminary report. The panel also proposes to couple the “universal” option with a lifecycle investment option. AIST, along with others in the super marketplace, has examined various life-cycle investing models, and believes the jury is still out on their efficacy and whether they deliver superior returns long-term.

We also have concerns with the Panel’s thinking that “disconnected” members should be provided with a ‘conservative’ investment strategy. If, as at present, large numbers of members remain disconnected for extended periods, we would see investment strategies more in keeping with the universal category as appropriate. The not-for-profit sector already provides a low-cost and high-performing option – AUSfund – whose single investment strategy is effectively a low-cost conservative/balanced option. While AIST recognises that lost super is a $16 billion problem requiring urgent rectification, we do not believe that a model should be developed with the view to this problem continuing or that the government and the industry should throw in the towel on better educating fund members.