Associate Professor John Evans

There is a vast array of superannuation products on the market nowadays. However I’m not convinced that the large numbers of new products really helps to add value for the majority of investors.

The bulk of members really couldn’t care less about the plethora of peripheral products.

Disengaged members typically make up the vast bulk of industry fund members, and it is estimated nearly 70 percent of not-for-profit fund members have their super invested in the default option.

Indeed, fewer than one in three people are making the effort to choose how they want their super invested.

New investor options are targeted at a small but asset rich minority of members, and not the larger investor base. Directors and fund executives are entangled in the bigger is better race to amass more funds under management.

But does this help the average common-or-garden investor?

No. Not a jot.

Industry funds should go back to the root of their business, and provide low-cost, simple products for members, because as investment choice rises, so do costs. Investors who want the full range of investment products could transfer to DIY funds, where there more flexibility, although I do have to warn that a lot more hands-on involvement could be time consuming.

Industry super funds argue that without an entrepreneurial approach, super funds mandate to grow and protect Australian’s retirement funds would be at risk. OK, fair enough, however although some people like the new options, many members don’t want extra facilities such as cash deposits or direct property investment. They just want to save for old age. Investors just want simple, low cost easily understood investments that do not fluctuate in value too much.

John Evans is an Associate Professor and Head of Risk & Actuarial Studies at the Australian School of Business.