The Productivity Commission’s most recent report on superannuation has called for another inquiry into superannuation, which has apparently been given some support within government circles.
But do we need another inquiry? If we do, who would be suitable to conduct it?
ASFA’S research indicates that over the last decade there have been nearly 25 substantial superannuation-related reviews and inquiries.
As a result, the pool of great, good and “well-informed” in superannuation able to conduct a review has been largely exhausted. Especially if you rule out individuals who have an actual or potential conflict of interest through their current day job. Those who have already participated in a major inquiry, such as the Financial System Inquiry or the Cooper Review, are also unlikely to volunteer to revisit territory they’ve been before.
Of course, I could put my hand up for such a role, but I intend hanging around ASFA for some time yet.
And as we saw with the Expert Panel for the Fair Work Commission (that never really got underway), those conflicts of interest can certainly rule people out.
There are some good reasons why actual or potential conflicts of interest must be well managed. Knowing what the results of a review will be because the review panel is handpicked with people who have sympathetic views to you can be a convenient approach, but it can lead to findings of a review either being impugned or not well respected.
I am also a bit wary about involving those who have retired and no longer have a direct link to any superannuation related entity (other than as a member of their fund). Some self-funded retirees have a lot of time on their hands and can be prone to pursuing rather strange public policy proposals on superannuation!
More fundamentally, of the possible topics, which have not already been well explored? Aren’t the issues now more about implementing the changes that make sense, rather than raking over old ground?
For instance, the issue of selection of default superannuation funds has been regularly reviewed, normally every few years, over the last decade. What has chiefly been lacking is a well-developed community or political consensus on the best way forward. Plus, sometimes further reviews or commissions have come up with findings that did not necessarily fit in with the prior views of those establishing the reviews.
It also would be worrying if topics we thought had bi-partisan support, such as if the legislated timetable for increasing the Superannuation Guarantee (SG) to 12 per cent, became open to question because of a further review.
Recent polling commissioned by ASFA indicated that a significant majority (over 90 per cent) of those surveyed support, or strongly support, compulsory superannuation, with nearly 70 per cent indicating they strongly support it.
The overwhelming majority of respondents also supported, or strongly supported, the scheduled increase in the SG to 12 per cent, with around 80 per cent of respondents, across a range of demographics, either supporting or strongly supporting the increase.
Libertarian economists, particularly those associated with right-wing thinktanks, struggle to see the merits of compulsory superannuation but the general population gets it. They know that without compulsion they will not make the necessary savings and as a result will not achieve the sort of standard of living in retirement they need and want.
The Australian superannuation system is not without flaws, but in many cases solutions to shortcomings are being put in place. For instance, problems related to unnecessary account duplication will be very much reduced when the ATO reunites small inactive accounts with a fund member’s active account. There will also be caps from 1 July on the fees that can be taken from low balance accounts.
What would be refreshing to see are reforms that reduce operating costs for funds and hence enhance net returns. Many of the recent ‘reforms’ in effect are about shifting the burden of fees from one class of members to another. Implementation and ongoing compliance costs need to be paid by all or nearly all fund members.
Every inquiry sucks up the time and energy of funds’ senior staff. It would be good if we can get to a stage where that energy can be concentrated on improving member outcomes rather than on participation in yet another review.
