It is now more than a decade since the so-called Cooper Review delivered its final report and gave rise to a range of key changes still filtering through the Australian superannuation system, not least MySuper, SuperStream, and the push for greater scale amongst Australian Prudential Regulation Authority (APRA) regulated funds.
And in recommending the establishment of MySuper, the review panel led by now Challenger executive, Jeremy Cooper, referenced a “simple, well-designed product suitable for the majority of members”.
The panel said the MySuper concept “is aimed at lowering overall costs while maintaining a competitive market-based, private sector infrastructure for super. The concept draws on and enhances an existing and well-known product (the default investment option). MySuper takes this product, simplifies it, adds scale, transparency and comparability, all aimed at achieving better member outcomes”.
A decade down the track, what can be said about MySuper is that, on the available information, it has resulted in generally lower fees but it cannot be said to have generated greater member engagement.
In fact, those with long enough memories will recall that before the Cooper Review came along and suggested MySuper, a significant part of the work carried out by organisations such as the Association of Superannuation Funds of Australia (ASFA) and the Australian Institute of Superannuation Trustees (AIST) was the encouragement of fund members to actually engage with their super; to understand how much they had and what it delivered.
Today, as the Morrison Coalition Government pursues its Your Future, Your Super legislation on the back of its earlier Protecting Your Super Package (PYSP) and Putting Members’ Interests First (PMIF) legislation, there is good reason to suggest that superannuation funds and their representative bodies should once again be vigorously pursuing the encouragement of member education and engagement.
Quite simply, there is already abundant evidence that the combined effects of the PYSP and PMIF legislative arrangements have driven down insurance coverage within superannuation and there are justifiably mounting concerns about how the passage of the Your Future, Your Super legislation may magnify some of the effects.
Indeed, there are suggestions that there are those in the Government who are committed to pursuing an agenda which would see insurance inside superannuation as entirely voluntary across all age cohorts, something which would have significant implications for the nation’s already large insurance gap but for the profitability of the major life insurers.
Forgotten in much of the discussion around insurance inside superannuation is the fact that, for many Australians, it is the only significant life insurance cover that they hold and that they would be most unlikely to pursue alternative cover either directly or through a life/risk adviser. This fact alone, should make elected representatives and their non-elected advisers take pause.
Then, too, there is the reality that for many Australians working in dangerous occupations, obtaining insurance cover outside of superannuation would be simply too difficult and too expensive to afford.
These are just a few of the reasons why superannuation funds and superannuation industry organisations need to be encouraging members to understand what their funds are delivering and what it is really worth to them. This would at least help members to make an informed judgement about whether what the Government is legislating is in their best interests or its own – something which was entirely questionable with respect to the COVID-19 hardship superannuation early release regime.
As with everything, in superannuation knowledge is power and members need to be educated and informed about what they’ve really got and what it is worth.