Profiteering banks a drag on Aussie retirement: ISA
The Productivity Commission (PC) should focus on the world's best retirement income systems and a key difference between those systems and Australia's is the for-profit motives of the banks, according to the Industry Super Australia (ISA).
ISA's chief executive officer, David Whiteley, noted that what separated Australia from the best systems was the fact it allowed for-profit funds to participate, "despite clear and serious conflicts of interest".
According to Mercer's 2016 Global Pension index, the retirement income systems of Denmark, the Netherlands and Australia, were ranked first, second and third, respectively. Additionally, Chile and New Zealand were being held up as exemplars in the Productivity Commission's review process.
According to Whiteley, the best systems should involve both employee and employer representatives working together to secure delivery of income for retirees and, as he stressed, they were not about generating profits for banks and financial institutions.
ISA, in its submission to the review, highlighted the key features of the successful Danish and Dutch systems that were already visible in the Australian industry, corporate and public sector default funds, such as:
- Trusted providers run on a not-for-profit basis only for the benefit of members;
- Industry or multi-industry funds generally affiliated with or approved by industrial parties; and
- Wholesale rather than retail in structure to leverage scale and minimise costs.
"The approach to superannuation in Denmark and the Netherlands — along with the part of Australia's system built and maintained by union and employers — is internationally lauded," Whiteley said.
"The key difference is that these systems and institutions put member interests above those of others, including shareholders.
"Super is different to banking and industry super funds are deliberately different to bank super funds."
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