PC complexity will drive up super costs
The complexity around the assessment framework of the Productivity Commission's review of the superannuation system's competitiveness and efficiency will increase costs for members, according to the Association of Superannuation Funds of Australia (ASFA).
Commenting on the PC's report, which was released on 25 November, ASFA chief executive, Dr Martin Fahy, expressed concerns while acknowledging the challenges that laid in assessing the efficiency and competitiveness of the super system and the PC's efforts to analyse the impact of the regulation.
"However, given there are 89 unique indicators and 22 criteria to assess in this framework, ASFA believes it will make it difficult for the commission to draw meaningful conclusions," Fahy said.
Fahy also noted 17 per cent of the indicators would require new data to be obtained from the industry, which he said would burden the industry despite some of the reporting being voluntary.
"Ultimately, higher data costs for the industry are borne by members and the industry is already subject to extensive data reporting and compliance requirements," he said.
The PC said it would attempt to draw on existing data to the extent possible, including regulator data and data that could be sourced from the private sector. It would also attempt to source it from published information such as product disclosure statements and annual reports.
"Only a minor share of indicators will rely on new data collections, and these will be via surveys (of funds and members) and case studies," the report said.
The Financial Services Council (FSC) supported the PC's commitment to assess the competitiveness of the current default funds market, which the FSC said was "not conducive to competition by incumbent industry funds".
FSC chief executive, Sally Loane, said: "In particular, the PC is correct to have called out consistent underperformance by some incumbent default industry funds".
Loane also said the FSC supported the PC's focus on lower fees, product innovation, and higher returns.
"For too long now the anti-competitive and outdated industrial system has stifled competition and in many cases left consumers worse off," she said.
The PC's commissioner, Angela MacRae, said the commission's focus was on the whole system.
"This is not about comparing the performance of individual super funds or products," she said.
Recommended for you
Financial Services Council chief executive, Blake Briggs, is urging Minister for Financial Services, Stephen Jones, to take advantage of the QAR opportunity to reduce regulatory duplication and ensure advice is affordable.
Former chair of the House of Representatives’ Standing Economics Committee, Tim Wilson, is planning a return to politics after losing his seat in the 2022 federal election.
Morningstar is going to offer research ratings of funds in the $3.5 trillion superannuation sector for the first time in response to demand from financial advisers.
Treasurer Jim Chalmers has opened a consultation into the design of the annual superannuation performance test, canvassing views on a range of reform options.
