The Productivity Commission (PC) has been accused of developing a report aimed at addressing political issues but totally disregarding the best interest of members of superannuation funds.
Financial services business broker, Paul Tynan has dismissed some of the core findings of the PC’s report into the competitiveness and efficiency of the superannuation industry and particularly the suggestion that a body should be formed to select the top 10 funds.
“I have worked in the superannuation and investment industry for over 40 years and its ‘Common Sense 101’ NOT to engage in picking winners,” he said. “Picking fund performance winners has so many different variables. Investment funds have different investment styles, asset allocations, benchmarks, research, trading methodology, currency policy, ethical policies, governance policies and access to listed and unlisted investment assets. Comparing the returns of one balanced fund to another is like comparing apples with oranges.”
Tynan said that while he agreed that pressure needed to be applied to underperforming funds to make them more accountable to their members, it was up to the industry associations, regulators and the Government to apply pressure for them to merge.
“Trustees are legally obliged to act in the best interests of members, but why isn’t this being enforced,” he asked.
Tynan said that the Australian superannuation system was recognised worldwide as being progressive, but had not received a report based on selecting winners for political reasons – something which he believed was simply bad public policy.
“At a time when financial advice has never been more important to Australians, the number of consumers that can afford/access advice is in decline due to mounting costs, regulation and client affordability. Simultaneously, the need to access advice, particularly in the area of retirement and debt management continues to increase dramatically and will escalate even further in coming years.”
“Hence the need for Australians to be financially literate as knowledge will assist them to take responsibility for their own superannuation assets,” Tynan said. “Unfortunately, self interest groups with loud voices continue to dominate the debate and influence policymakers at the expense of the long-term sustainability of the financial services sector – and in turn the well-being of Australians and the economy.”