The Australian Government Productivity Commission has released an inquiry report that assesses the efficiency and competitiveness of Australia’s superannuation system and develop alternative models for allocating default fund members to products.
The findings from this report include:
- The current super system needing to adapt to better meet the needs of a modern workforce for a growing pool of retirees with structural problems such as multiple unintended accounts and ingrained underperformers harming millions of members;
- Mixed performance among superannuation funds;
- Inadequate competition, governance and regulation throughout the industry;
- Current policy initiatives have addressed some of the problems, but a structural change is required; and
- Implementation of any changes can start now, this would need to be phased in carefully to protect member interests
This report further highlights some of the problems within the superannuation industry such as:
- Most members affected by underperforming superannuation funds being in retail funds;
- Evidence of excessive and unwarranted fees;
- One third of accounts being unintended multiple superannuation accounts leading to $2.6 billion a year being eroded from member’s balances in unnecessary fees and insurance; and
- Regulators needing clearer roles with more focus on the interests of members and not funds.
The report includes 31 recommendations aimed at improving outcomes for members and system stability as well as reducing the barriers to efficiency and competitiveness of the superannuation system.
Productivity Commission, Superannuation: Assessing Efficiency and Competitiveness, 10 January 2019