Government should respond to Productivity Commission super report

Nest egg, superannuaiton, SMSF, retirement
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An accounting body has called on the Government to publicly respond to the Productivity Commission report into superannuation.

Chartered Accountants Australian and New Zealand (CAANZ) has, in its 2019/20 Budget submission, encouraged the Government to announce which superannuation-related recommendations of the Productivity Commission it “intends to fully accept, take up with modifications or reject and the expected timeframes for implementation”.

“The superannuation sector is constantly subject to change and adjustment and it is essential that funds have time to prepare for any new policies affecting how they operate,” says CAANZ.

The Government tasked the Productivity Commission with an inquiry into superannuation, which was a recommendation of the Coalition-initiated Financial System Inquiry.

Scott Morrison, who was Treasurer at the time, announced the three-stage Productivity Commission inquiry in February 2016. In the years since the Productivity Commission considered how to assess efficiency and competitiveness in the super system, applied these methods, and investigated alternative ways to set default super funds.

When Treasurer Frydenberg publicly released the resulting report in January 2019 he said the Government would “carefully consider” the recommendations, but needed to wait for the final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services before finalising a response.

Coalition MPs were critical of the Labor party for the time taken to respond to the Financial Services Royal Commission, which the Coalition responded to over a weekend. Though the Government has since changed its position on the recommendations around mortgage broking.

The Government’s said that a number of its responses to the recommendations of the Royal Commission also responds to the Productivity Commission report. CAANZ made its recommendation before the Government responded to the Royal Commission, though the Productivity Commission’s own website says “there has not been a government response to this inquiry yet”.

A core recommendation of the Productivity Commission was for a panel to determine a short list of ‘best in show’ super funds, which would be shown to employees new to the workforce.

The Royal Commission recommended that people should only have one default account, maintained by ‘stapling’ the person to that account.

“The Government agrees that a person should have only one default account,” said the Government’s response to the Royal Commission.

“This also responds to the Productivity Commission’s report Superannuation: Assessing Efficiency and Competitiveness which recommended members without an account only be defaulted once.”

The Government has not detailed the method by which it would achieve a single default super account, including neither rejecting or adopting the Productivity Commission model.

The Government has had the Productivity Commission report since 21 December 2018.

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