The Financial Services Council/ING Direct Superannuation Sentiment Index found that awareness of fees correlates with age and type of fund – with younger working people with ‘traditional’ super funds largely in the dark.
“When asked to explain this lack of awareness, a lack of control was cited for this disengagement with their fund,” said the report.
Those nearing retirement with SMSFs were much more aware, it found.
Commenting on the findings, FSC chief executive John Brogden said self-managed superannuation was a unique feature of Australia’s compulsory pension system.
“People from around the world are quite stunned to realise how much is self-managed. It’s fully one third of the assets – around one million people,” Mr Brogden said.
“If you force people to save, you’ve got to give them some choice in the way in which they save.”
It makes “perfect sense” that people who are self-managing their money have more awareness of their fees and costs, said Mr Brogden.
“Certainly [an SMSF] is the ultimate in having control, because you can move your investments around and you can control them directly,” he said.
But general consumer knowledge of superannuation costs is set to change as the MySuper regime takes hold and APRA begins publishing its quarterly superannuation fees and returns data, said Mr Brogden.
“[However,] this is a double edged sword. This is where we run the risk of sounding paternalistic,”
“It’s a 40-years investment. You don’t want people changing every month because they don’t like the returns on the product they’re in,” said Mr Brogden.
“History has shown that the people who sold all their shares at the bottom of the financial crisis took a bath – particularly if they were in their 30s. And those shares have all come back,” he said.
“So there is a risk of short-termism, there’s absolutely no doubt – there’s a risk of short-termism that comes from greater comparison and a public sense of fees and performance.”