I blundered upon this article last night as I was considering what had just happened at Aintree. I reference yesterday’s Grand National as the 39 runners and riders were all tipped by someone to a point that I bet on the favorite, that turned out to be a winning strategy. The favorite had won twice at Cheltenham and its trainer had won another Grand National recently. It should be noted that the first winner of the Grand National was called Lottery, picking winners seems that way, but markets are formed and favorites created and favorites are more likely to win than other horses. Past performance is a starting point.
The article is about the choices that people saving for their retirement in Australia continue to have, the choices are diminishing because schemes are merging with other schemes. This is happening voluntarily, and – as the article states – at the insistence of the Australian Government.
ASIC has called out the trustees of four industry super funds for poor communications of the fund’s failure of the Your Future, Your Super (YFYS) performance test for the second consecutive time.
In a press statement on Wednesday, ASIC called out Australian Catholic Superannuation, BT Funds Management, Energy Industries Superannuation and Equity Trustees Superannuation for inconsistent and unclear communications to members about failing the test or merging with another fund. Australian Catholic Super signed an agreement to merge with UniSuper, which it completed last year.
“Trustees that fail the performance test need to get the balance right in their communications – they need to be transparent and factual about the performance of the failed product,” ASIC commissioner Danielle Press said.
The regulator found some trustees took a reactive approach to performance test communications or significant events such as mergers and did not have cohesive communications strategies in place.
ASIC is the FCA to APRA’s TPR – together ASIC and APRA establish who is getting value for their money when investing in Australian “Super” retirement funds.
There are failing workplace pension schemes in the UK and no one is calling them out because we worry about litigation and because “past performance is not necessarily a guide to the future”. We hang on to myths such as “institutional pensions will always provide better outcomes than retail pensions“.
So a workplace pension that has delivered 0% growth on member contributions over 5 years can continue to be marketed to employers as a product fit for their staff.
The Sidney Pollack film (and previous book) , “They shoot horses don’t they?” posed the question whether it is kinder to put an animal out of its misery early or allow it to die a prolonged death (for the dancefloor think pension scheme management). The Australian Government clearly considers it is kinder to put schemes to sleep than to keep them alive.
The UK Government is also considering a “performance test” for workplace pensions (our Super). It is talking of following Australia in forcing schemes that fail such a test to cease marketing themselves to new employers and ultimately to wind up.