Mr Ripoll, who gave the Opposition’s ‘right of reply’ speech at the SMSF Professionals’ Association of Australia conference in Brisbane on Friday, said the so-called ‘direct investment’ options being rolled out by superannuation funds seek to replicate the SMSF experience “as a key pillar of their retention strategy”.
“However, providing such an option makes managing the overall fund more complex, giving rise to taxation and liquidity issues,” he said.
“[In addition], it is not clear that such offerings will prevent institutional fund members, particularly as they approach retirement, in moving their accumulated balances to an SMSF,” said Mr Ripoll.
The minister said he expected to see similar trends and innovations to continue as superannuation account holders continue to engage with their superannuation as they grow older.
The competition between retail funds, industry funds and SMSFs has “never been more vibrant”, said Mr Ripoll.
“Given that choice of superannuation fund is available to most employees, there is bound to be healthy competitive pressure between institutional funds for the all mighty superannuation dollar,” he said.
“The growing awareness of the availability of SMSFs as an alternative to institutional funds also provides for even more competition,” said Mr Ripoll.
But the competitive pressures in the market are generally moderated by a lack of interest by most people “up to a certain age” about their superannuation; the “complexity of choice” faced by workers in choosing funds; and the entry/exit fees of changing funds or receiving advice, he said.
“Interestingly, surveys and statistics of movements between funds suggest that the level of fees and performance are the main reason people switch between funds,” said Mr Ripoll.
