TheFinancial Planning Association (FPA)has renewed its push for the introduction of member choice in superannuation, calling for a return to greater urgency in the debate over the choice-of-fund legislation.
Scheduled to appear before a Senate inquiry into choice of superannuation fund legislation today, the FPA’s chief executive Ken Breakspear and senior manager of public policy Con Hristodoulidis were expected to argue that any delay in the introduction of a federal super choice regime would only add to the confusion in the community about retirement savings.
In a written submission to the inquiry, made yesterday, the FPA said State legislation to introduce a limited form of member choice in superannuation already existed in New South Wales, Queensland and Western Australia, adding to the confusion of employers and employees who could not operate under a nationally uniform superannuation system.
The FPA also said in its submission that superannuation choice would increase the level of national savings by compelling people to take a more active interest in how they saved for retirement, as well as boosting competition and efficiency in the superannuation industry.
However the FPA has warned that the introduction of super choice without an adequate consumer education campaign could have disastrous consequences.
“The provision of education is far from costless, however expenditure on a well-developed program should be considered an investment. Without an education campaign, consumers are more likely to make inappropriate choices therefore placing the entire superannuation and retirement incomes system at risk,” the FPA says.
But the FPA has dismissed criticisms that super choice would leave consumers open to unscrupulous financial advisers, arguing that consumers would be protected under the new Financial Services Reform Act (FSRA).
Opponents of super choice have argued that it would lead to excessive churning, where commission-based financial advisers would convince their clients to change super funds unnecessarily, a situation that arose to costly consequences in the UK and Chile when choice of fund legislation was introduced.
“Consumers are protected from such instances in Australia because of…the FSRA, which ensures a high level of disclosure when planners advise clients to change their investment choices,” the FPA says.
