The Super Members Council (SMC) is warning Australians to be wary of moving their superannuation into platform funds that are usually more expensive, following the Australian Securities and Investments Commission (ASIC) report that found gaps in platform trustee oversight.
The corporate regulator’s report found for the decade up to 2025, super platform funds under management increased from $123 billion to $396 billion as advice fees deducted from platform accounts rose more than fourfold to $2.3 billion. But at the same time, ASIC found some trustees failed to appropriately protect members’ retirement savings.
“Many of the clear gaps in oversight are deeply concerning and difficult to justify,” ASIC commissioner Simone Constant said.
Further, Financial Services Council (FSC) research, released just days before the ASIC report, claimed for certain balances a wrap, or super platform, could be more cost effective than a MySuper option.
SMC has disputed that claim, highlighting analysis of official data reported to the Australian Prudential Regulation Authority (APRA) found for someone with $50,000 in super, the median representative administration fees and expenses on a platform product are 0.47 per cent, which is nearly double the comparable rate of 0.25 per cent for a MySuper product.
It also indicated members of platform super products have lower risk-adjusted returns and are, on a member-weighted basis, around 0.9 percentage points a year behind MySuper products in a like-for-like, asset-allocation-adjusted and fee-inclusive comparison.
According to the SMC, another issue in the FSC report is members of platform super products typically have lower, not higher, exposure to growth assets, with allocations to them on average being 70 per cent for platforms, as analysed by APRA, as opposed to 77 per cent for most MySuper default super options.
“Fully informed consumer choice has a crucial role to play in helping Australians make good financial decisions and the evidence shows most Australians continue to be better off financially in APRA-regulated, high-performing and low-cost mainstream profit-to-member super funds, the backbone of Australia’s world-class super system,” the SMC stated.
The council also highlighted the fact that up to 80 per cent of members advised to switch into Shield and First Guardian appear to have been unaware that was where their super savings were moved.
