PC’s super report delivers on Government’s terms

Inadequate competition, governance and regulation have led to a situation in which many Australians are not achieving an optimal outcome from superannuation, including being signed up to underperforming funds, holding unintended multiple accounts and having their balances eroded by unsuitable insurance.

That is the bottom line of the Productivity Commission’s (PC’s) third tranche assessment of Efficiency and Competitiveness in the Australian superannuation industry.

In making that assessment, the PC has delivered squarely on the terms of reference outlined by the Government more than two years’ ago, and it will be up to the Turnbull Government or its Labor successor to decide what is to be done about the shortcoming identified in the draft report.

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It will be pleased with the PC’s recommendation that members should only ever be allocated to a default fund once, upon entering the workforce, and that they should be empowered to choose from a “best on show” shortlist set by an independent competitive process.

What will not please the Turnbull Government, however, is that the PC’s assessment that “most (but not all) underperforming products are in the retail segment”, but it will be pleased by the assessment that Labor’s default funds under modern awards regime has led to inadequate competition.

The PC’s draft report concluded that “rivalry between funds in the default segment is superficial, and there are signs of unhealthy competition in the choice segment (including the proliferation of over 40,000 products)”.

It said that while the default segment outperformed the system on average, the way members were allocated to default products left some exposed to the costly risk of being defaulted into an underperforming fund.

Further, the report said the regulators focused too much on funds rather than members, with sub-par data and disclosure inhibiting accountability to members and regulators.

The PC’s draft report findings also stand to erode the MySuper outcome of the Labor-initiated Cooper Review, arguing for an elevated threshold for MySuper authorisation and more encouragement for members to get “engaged in products they can easily and safely choose from”.

“This is superior to other default models – it side-steps employers and puts decision-making back with members in a way that supports them with safer, simpler choice,” it said.

The PC’s draft report also backed the Government’s push for stronger super fund governance, especially around board appoints and mergers, and urged funds to do more to provide insurance that was valuable to members.




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"but it will be pleased by the assessment that Labor’s default funds under modern awards regime has not led to inadequate competition" typo?

Much of the discussion in this mornings media has been the tonal emphasis on the unreasonable fees and "unnecessary" insurance cover attached to peoples multiple superannuation accounts.
Firstly, a large part of the issue with multiple superannuation accounts is that a vast majority of people are incredibly lazy and negligent in their management of their own business and spend next to no time at all even basically investigating the process to consolidate their superannuation accounts.They then whinge that their superannuation accounts have been declining in value due to fees being charged to retain and administer an open account and invest whatever monies are held . What they really want is for someone to do it all for them but charge no fees, take no interest in it and retire comfortably.
The interesting thing in regard to the insurance cover is that it is entirely necessary when someone needs to make a claim.
If superannuation funds are to be consolidated, what happens when possibly hundreds of thousands of dollars of insurance cover is lost in the transfer and a member has a claim ? Who is responsible, who will pay the bill ?
In terms of superannuation funds acting in the best interest of their members , it must be time for certain Industry Super Funds to cease pouring millions of members monies into rugby team sponsorship programs without their members consent. It would be difficult to justify this strategy actually enhances the retirement outcomes of their members. The mantra " Run only to benefit members" must have either run it's race by now or needs to be re-worded into " Run only to benefit members....and some very,very wealthy rugby clubs and their grossly overpaid players".

Productivity commission is obviously staffed by unqualified theorists who have no experience or wider recognition of broad issues, nor how to fairly and accurately 'compare the pair'.

Any supposedly independent body that states that ISA funds do outperform are obviously lazy or inept and unqualified in the first place to make such an assessment. I believe there is no component of that report that has analysed the sole purpose tests adherence or lack of where ISA pay millions to unions, where they skew asset allocations dangerously to manufacture returns, where they hold opaque assets that no one has information on, nor the recently discovered but un-investigated by ASIC 'fee for no service; in First State Super, where the ISA funds pay and receive various commissions, none of which benefit members but normally flow out to the union bodies,

Yep, sounds like a reasonable, fair, unbiased in depth report to me if they ignore these facts.

That is like someone utterly unqualified in cars, transport or road issues being asked to write a report on national traffic conditions, and their buffoon report concludes that a WRX goes faster than a Corolla, so everyone should have one. The only 'zombies' where this PC report is concerned, are the authors. F'tards

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