Govt's MySuper approach flawed and inconsistent
Superannuation fund members who have deliberately chosen to invest in a default option should not be subject to automatic transfer to a MySuper fund, according to the Association of Superannuation Funds of Australia (ASFA).
In a submission responding to the Australian Prudential Regulation Authority's (APRA) draft prudential practice guide, ASFA has also claimed that the Government's legislative approach to MySuper is flawed and not consistent with the Super System Review.
"We consider that the legislative approach of focusing on the underlying investment options and not the member is flawed," the submission said.
"As opposed to being member-centric, the current paradigm reflected in the legislation is focused on MySuper money and choice money, leading to outcomes were a member's status as a MySuper member and/or a choice member can fluctuate daily, or even more frequently, in line with their investment choices," it said.
"By virtue of investment switches a member could be a MySuper member only one day, but a choice and MySuper member the next, a choice member only the next day and back to being a choice and MySuper member the following day."
The ASFA submission said the organisation saw MySuper having a valid role to play with respect to "default" members who had not made any choices, and those members who choose to invest in MySuper.
"For those members who have chosen to participate in a particular fund or in investment choice, however, it is appropriate to treat them as a choice member - they have made choices as to their fund and/or as to the investment of their money," the submission said.
AUTHOR
Staff Writer
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.
