ISA attacks direction of PC super inquiry

31 August 2017

Industry Super Australia (ISA) has mounted a strong attack against the processes being pursued by the Productivity Commission (PC) and is arguing that competition does not improve outcomes for members, but has instead been used to sell a growing number of members into poor performing products.

The ISA has used its submission to the PC’s Inquiry into Superannuation Competitiveness and Efficiency to argue that a key regulatory impediment to increasing the efficiency of the superannuation system “is the ease with which members can be allocated or sold-into poor quality choice and [self-managed superannuation funds] SMSF products”.

It said this could be remedied by having product providers prohibited from soliciting members unless “they can reasonably demonstrate such members would be better-off in terms of net retirement income if they left their existing default fund”.

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The ISA also claimed the situation could be remedied in part by allowing the revised award default selection process under the jurisdiction of the Fair Work Commission (FWC), “so ensuring that only the best performing and industrially-relevant funds are named in awards”.

However, on the question of the PC’s focus and terms of reference, the ISA submission left no one in any doubt about the industry fund organisation’s views, stating: “The commission’s pre-occupation with competition is further reflected in the issues paper’s relative neglect of issues pertaining to the choice and self-managed fund sectors”.

“Given that these segments routinely under-perform default funds, and so constitute the most inefficient parts of the superannuation system, this apparent disinterest is both striking and of considerable concern,” the submission said. “It is further reflected in the list of published indicators that the commission now intends to measure.”

“An important issue that could be usefully explored by the commission is how and to what extent funds utilise choice products and options as part of their marketing strategies to maximise revenues and profits,” it said. “This would contextualise product/option proliferation and advice-driven sales – not as evidence of contestability and competition – but as indicators of how for-profit funds extract value from the system as the core aim of their business model.”

 




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Why isn't anyone calling out the union funds on this. Competition is good. Clients are allowed to have a choice. Just because a person doesn't want to use a union fund doesn't mean they have made a mistake. Consumer groups like Choice who were very vocal around opt in are no where to be seen when the unions are publicly stating that they should be the only super fund consumers have to use. How is that good for consumers? I know unions live off closed shops but this is very concerning for consumers.

Why do you publish this rubbish from ISA. It just gives them oxygen.

It said this could be remedied by having product providers prohibited from soliciting members unless “they can reasonably demonstrate such members would be better-off in terms of net retirement income if they left their existing default fund”.............has the ISA heard on the Best Interest Rule? I think that makes this sentence redundant.

What did the FPA submission say? Are they going in against the nonsense perpetrated by these self interest groups?

The ISA tactic has always been deny, distort truth, distract and defame other groups. Hopefully this commission has the balls and clout to deal them a death blow.

Does Choice even exist anymore, the organisation that is? And, yes, this is an ideological battle, the ISA don't believe in the economic theory of creative destruction. That is, the best products will eventually rise to be the choice, the worst are weeded out by choice of the public. They don't seem to be too confident in their funds in this case. Why do they fear competition?

It appears to me that ISA fails to recognise superannuation monies are not their's. The monies belong to the Members and it should always be the Member's choice how and where their hard earned savings are invested.

I have an SMSF because I don't want socialists taking control of my retirement funds so, ISN go take a hike. God help retirees if the Labor Party wins government again, it will be a total screw up but of course favoring Socialists.

So if I invest with a Union Super fund and the member dies and when it takes 9 months to transfer funds to the spouse how is that competitive and efficient, when the retail fund took 2 weeks. How was the Union fund competitive and efficient when they lost my clients paperwork and cheque three times and the client had to borrow for the overseas triip ??? How was the Union Super fund competitive and efficient when children of the deceased have to learn what an anti detriment payment and if so then apply when the retail fund paid it automatically. How is a Union Super fund competitive and efficient if you can only change a pension payment once per year. How is having an authority to enquire that last only 12 months with no other options efficient and competitive. I could be here for days. Union Super funds should be banned.

Well said Old Bob - we have had exactly the same issues with Union funds deliberately obfuscating the requirements and then 'not receiving' paperwork at least twice before mysteriously having them when we mentioned the words 'reportable breach'.

The more concerning aspect, as we all know the ISA are self interested vertically aligned and allegedly corrupt, is that both ASIC and APRA seem content to let these malfeasant cretins get away with anything they want and yet are on an unholy witch hunt when it comes to a planner sneezing at an inconvenient time.

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