The Productivity Commission’s Superannuation Inquiry report released on 10 January suggested far-reaching reforms to fix hugely expensive inefficiencies in the superannuation system. The reforms are estimated could bring nearly $4 billion a year to super members if enacted. Nobody is surprised that nothing’s going to be as smooth as that.
At the Labor Party’s recent national conference, Labor leader Bill Shorten’s opening speech set the scene for the upcoming Federal election. Along with housing affordability, superannuation featured significantly in the address.
“The retirement savings of Australian workers are a workplace right,” said Mr Shorten. “Bosses who rip off their staff, who don’t pay their super, who steal their super, should receive the same punishments and penalties as those who violate other workplace rights.”
This sounds like great news for super members, but Mr Shorten’s further comments that the bottom quarter of underperforming funds – whether industry or retail – need to either merge or be “given their marching orders” are causing more of a stir.
These statements may put Shorten in opposition with Labor’s traditional Union supporters, with several union-backed funds in those funds delivering below-average returns, including Maritime Super, Combined Super and Victorian Independent Schools Super.
While some super bodies feel the Commission’s recommendations have merit, some of the funds identified as “low-performing” are protesting that the measures to determine the lowest quartile of funds don’t tell the full story. Mercer Super and Catholic Super have both claimed that the data used “does not represent the diversity or life cycles of its super products”, according to Fairfax reports.
At the same time, the Coalition is waiting until after the banking royal commission’s findings are known before exploring further the idea of using the government-backed Future Fund as a default scheme. Minister Kelly O’Dwyer seems to like the idea though the PM himself, Scott Morrison, doesn’t sound too committed to the concept.
Only one thing is certain – regulatory reform won’t be easy and Australia’s best hope of a good outcome is bipartisan support to get it done efficiently and as soon as possible.
In the meantime, if you would like to speak with a professional investment adviser about your existing superannuation fund, contact United Global Capital today on 03 8657 7640 or email [email protected] for a no cost, no obligation consultation.
Photo: Alex Ellinghausen