Fees are the main driver of superannuation fund choice with 74 per cent of respondents to a survey reporting they were the most important factor in decision making.
The survey, done by UMR Research for the Industry Super Australia, found the history of past returns was the second most important factor cited by 64 per cent of respondents.
In third position was investment flexibility with 60 per cent citing the ability to easily choose and change investment options as an important factor. These priorities remained similar across age groups with Millennials; Gen X; and Baby Boomers all expressing the same view.
Technology employed by funds ranked second last at 35 per cent across all age groups. Ethical and sustainability concerns were most or very important to 10 per cent of respondents with another 12 per cent ranking them at number three position.
“Australians are quite right in focusing on what they’re being charged and what their superannuation is earning,” said Matt Linden, ISA’s public affairs director.
“Consumers can have confidence that differences in net returns provide a solid indication of the investment strategies and the effect of the all up costs of a super fund.”
The research comes as regulators and government are upping their oversight of the $2.3 trillion super sector.
Legislation recently returned to Parliament aims to reform the industry by mandating the make-up of superannuation fund boards to include one-third independent directors and an independent chair.
It will be accompanied by bills aimed at boosting transparency and accountability and enhancing fund choice for workers. The new legislation will also close a $1 billion loophole that allows employers to use their mandated super guarantee payments to cover employees’ salary sacrifice choices.
The $545 billion industry super movement has opposed the changes to board requirements. It is also opposed to new reporting requirements starting next months which require all super funds will have to disclose information on costs in their product disclosure statement.
But ISA claims a special exemption will leave “platforms” run by private sector super funds out of the cost reporting equation.
“Unfortunately with fee disclosure there is no simple and transparent way of comparing fees on various products across the entire system,” Mr Linden said.
ISA has called on regulator ASIC to delay these new fee disclosure rules until these anomalies are fixed. ASIC has said the new cost reporting rules will capture all costs and Revenue and Financial Services Minister Kelly O’Dwyer has said the change “supports increased transparency across the superannuation sector”.
*The New Daily is owned by a group of industry super funds