The Australian superannuation industry is sounding an alarm as data reveals a significant 17% increase in individuals switching their investments from mainstream super funds to riskier options, such as self-managed super funds (SMSFs) and platform products, over the past year. This trend is particularly evident among Australians with smaller superannuation balances, suggesting that a growing number of individuals may be opting for potentially higher-risk investment avenues in search of better returns.

Industry representatives, including those from the Super Members Council, are expressing concern over the implications of such a shift, especially following the collapses of financial entities like Shield and First Guardian. They emphasize the need for enhanced consumer protections to safeguard those venturing into these riskier investments. The CEO of the Super Members Council, Misha Schubert, has indicated that the situation warrants immediate attention from regulators and policymakers to prevent potential financial losses for consumers.

There is a call for tighter regulation within the superannuation industry as the trend poses risks not only to individual investors but to the overall stability of the super system. The increasing migration towards less regulated and more expensive super products could lead to significant financial repercussions for Australians who may not fully understand the risks involved. The discussion highlights a crucial moment for Australian regulators to step in and ensure the safety and security of superannuation funds for all members, particularly those with fewer resources to absorb potential losses.