Shortlist of super funds should replace current default fund system: Productivity Commission

The Productivity Commission is likely to recommend the current system for setting default super funds be replaced with a ‘best in show’ shortlist of funds from which employees would pick a single default super fund for their working life.

The Productivity Commission has publicly released its draft report into the efficiency and competitiveness of the superannuation system. It finds that the super system needs to adapt to the needs of a modern workforce and increasing numbers of retirees.

The Commission notes that some super funds consistently have high net returns, while a “significant number of products (including some defaults) underperform markedly”. Read more...

Costello says Future Fund could run nationalised superannuation

Former Treasurer Peter Costello has publicly supported having a single national super fund, a move which the superannuation industry says would put savings at risk.

Peter Costello, Chair of the Future Fund, was supportive of a single national administrator of super savings, and suggested the Future Fund could do the job, in a speech to the to the SuperRatings and Lonsec Day of Confrontation 2017 conference.

The Productivity Commission is set to report in 2018 on alternative ways to select default super funds. Its inquiry included looking at models overseas, including ones with a single retirement savings administrator. Read more...

$94 billion trapped in subscale super funds due to industrial awards: FSC

Up to $94 billion of superannuation savings is “trapped” in small, subscale and underperforming superannuation funds due to the industrial awards system.

The figure comes from the Financial Services Council (FSC), which says Fair Work Commission’s default super fund selection process is leaving up to 1.7 million people worse off in retirement.

Analysis by the FSC found there are 33 super funds listed under modern awards which each manage less than $10 billion. The average performance of the 33 funds over 10 years was “just” 4.50% per annum, which was 0.80% lower than the average of all ‘growth’ super fund options. Read more...

Government starts third and final part of PC super system review

The Government has started the third and final part of the Productivity Commission’s review of the efficiency and competitiveness of the superannuation system.

“The Turnbull Government has taken further action to ensure Australia’s superannuation system is as efficient and competitive as possible with the release of the Terms of Reference for the Productivity Commission’s system wide review,” said a joint statement by Treasurer Scott Morrison and Minister for Revenue and Financial Services Kelly O’Dwyer. Read more...

Vast majority want default super funds to return profits to members

The vast majority of Australians, 91%, believe that default superannuation funds should return all profits to members. This is the finding of a poll by Essential Media, conducted for the Australian Institute of Superannuation Trustees (AIST).

AIST CEO Eva Scheerlinck said the poll showed that the public wants a default superannuation system that values members, not shareholders.

“First and foremost, our default super fund system must ensure that members’ interests are protected,” said Ms Scheerlinck. Read more...

Under-performing super funds should lose default status: AIST

Under-performing superannuation funds should lose their default fund status, the Australian Institute of Superannuation Trustees (AIST) has told the Productivity Commission.

AIST told the Commission, in a public hearing into alternative models for setting default super funds, that long-term under-performing default funds should lose that status.

AIST CEO Eva Scheerlinck also called for better regulation to help consumers compare net performance between super funds. AIST has supported the publication of net benefit league tables of super funds by APRA. Read more...

Industry funds would still top list under Productivity Commission models

Industry super funds are likely to still be favoured under alternative models for selecting default super funds, due to their performance.

The Productivity Commission recently released its draft report into alternative models for selecting default super funds. The report has been criticised by Industry Super Australia and other superannuation industry bodies as opening up the default super fund process to retail – bank-owned – super funds.

However an analysis by SuperRatings finds that industry super funds are still likely to be favoured by the alternative models suggested by the Productivity Commission. Read more...

Everyone is “really sick” of super industry groups: Minister O’Dwyer

Everyone is sick of the superannuation industry groups, says Minister for Revenue and Financial Services Kelly O’Dwyer.

Minister O’Dwyer was asked on 2GB if the recently released draft Productivity Commission report into alternative models for setting default super funds was broader than industry vs retail funds.

“Well exactly right, and I think everyone is frankly really sick of industry groups, and by that I’m talking about superannuation industry broadly, fighting one another about their own vested interests,” answered Minister O’Dywer. Read more...

Productivity Commission proposes four ways to revamp default super funds

It would be possible for a person to have a single default super fund in their lifetime, instead of having multiple default funds as they change employers, under models developed by the Productivity Commission.

The Productivity Commission was tasked by the government with developing alternative models for setting default super funds. The Commission has now released its draft report, containing four default super fund models.

“After 25 years, and notwithstanding a history of reasonable returns as a general rule, structural faults are evident in default superannuation,” said Productivity Commission Chair, Peter Harris. Read more...

New anti-bank super campaign launched by Industry Super Australia

Industry Super Australia has launched a new attack campaign on the banks and their “attempts to dismantle the model used by the most successful part of the superannuation system, and put at risk the retirement savings of millions of Australians”.

The campaign, called ‘Banks aren’t super’, includes a TV ad depicting federal politicians opening the superannuation hen house for the waiting, ‘bank’, foxes.

“The commercial responds to bank attempts to secure unfettered access to Australia’s default superannuation system for those who don’t choose their own super fund,” said Industry Super Australia. Read more...