The long-awaited release of MySuper data by the Australian Prudential Regulation Authority has revealed some interesting numbers that must not be ignored.

The data – contained in the first of an ongoing quarterly APRA report on the MySuper landscape – includes a range of new information on the 116 MySuper products. The report provides an overview of key MySuper features including return targets, level of investment risks, fees and costs, assets and investments.

Given the short-term nature of the data (the report covers only four quarters since the launch of the MySuper) there is little point in making conclusions about the performance of any MySuper product. Indeed, APRA said as much when the data was released last month, recommending that users “exercise caution in drawing conclusions based on this interim performance data”.

But there is other (non-performance) data in the report on which meaningful – and disturbing –   conclusions can be made.

Despite the fact that one of the original goals of MySuper was to make super more comparable, the data points to a wide variation of fees, target returns, product type and costs. On a balance of $50,000, annual member fees and costs range from $265 to more than $1300. Such a wide variation – whether justifiable or not – raises concerns about the ability to compare apples with apples and underscores AIST’s long held belief that employers will need help in making the right choice about their default super provider.

But it is the revelation from the data that $77 billion of accrued default super still remains outside the MySuper space that is most concerning.

Even in an industry used to talking in terms of trillions – as opposed to billions – of dollars, $77 billion is a lot of money. More to the point, it’s a lot of precious nest eggs, owned by many thousands of Australians.

This $77 billion pool of savings represents default superannuation is effectively locked up in high-fee and, in some cases, commission-paying, bank-owned super funds as a result of four year grandfathering arrangements (read: concessions to bank and insurance-backed lobbyists) at the time of the Stronger Super reform negotiations. These arrangements are set to stay in place until June 30, 2017.

Accepting that most of this money would have otherwise found its way into low-fee MySuper products, thousands of consumers are paying significantly more for their super and missing out on other MySuper benefits, including higher levels of governance. Meanwhile, the Financial System Inquiry and many other commentators are raising concerns about the high level of fees in superannuation.

In contrast to the $77 billion retail super outside the MySuper space, the APRA report has confirmed that just $13 billion of savings in bank-owned and other retail funds has been transferred to the lower-fee MySuper funds.

Since the APRA data was released, the retail end of town has claimed that MySuper is a ‘game changer’ and predicted that fees will reduce further.

If the retail funds really believe this, then why aren’t they moving their default members across to this space? This begs the question: are the directors of these funds meeting their legal obligations to act in members’ best interests?

In a compulsory super system such as ours, is it really fair that some members are punished and discriminated against simply because they are disengaged? Is it fair that these members should have to wait nearly three more years to benefit from fee reductions?

AIST doesn’t think so which is why we have stepped up our call on the government to accelerate the June 30, 2017 deadline and for  APRA to release information on the fees charged by accrued default funds so there can be more informed debate before the Financial System Inquiry concludes its report.  As it stands now, the lion’s share of the $359 billion of savings in MySuper is invested in good value, high-performing not-for-profit funds.

While MySuper has already brought about lower fees, we won’t know the full benefits until all default super is moved to the MySuper arena and retail fund providers actually put their money where their mouth is.



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