The Association of Superannuation Funds of Australia (ASFA) says that the Productivity Commission’s final report into the superannuation system contains a number of recommendations that would, if implemented, materially transform the industry and undermine the widely acknowledged strength of the system.
“The Commission’s core recommendations relating to default superannuation contributions and the nature of superannuation fund membership would dramatically change Australia’s retirement income landscape,” said Dr Martin Fahy, ASFA CEO.
“ASFA is disappointed that the Productivity Commission has doubled down on the so called ‘top 10 best in show’ as a mechanism for allocating default super. This approach risks creating an oligopoly in default superannuation and reducing long term competition.
“Nevertheless, the report confirms the overall strength and relevance of the Australian superannuation system, including the importance of compulsory contributions and universal coverage of employees. In particular, the evidence contained in the report highlights that the vast majority of funds are delivering very good value to fund members as well as providing broader favourable economic impacts.”
The Commission’s recommendation to carry out a broad review of the retirement system prior to moving the Superannuation Guarantee to 12%, flies in the face of evidence. Superannuation has kept the fiscal burden of the age pension below 3%, allowed Australians to save $800bn more than they otherwise would have and will deliver higher retirement incomes for millions.
Australia has a world-class superannuation system. It is part of a broader retirement income system that has been independently ranked as one of the best retirement systems globally (behind only the Netherlands, Denmark and Finland) in terms of sustainability, adequacy and integrity.
Dr Fahy indicated however that there are no grounds for complacency and that the Productivity Commission recommendations need to be considered in the context of a number of changes that are already in train as a result of the hearings of the Royal Commission and policy review by the Government more generally.
The overall goal of any changes should be to produce better outcomes for fund members.
For further information, please contact:
Katrina Horrobin, 0451 949 300.
ASFA is the peak policy, research and advocacy body for Australia’s superannuation industry. It is a not-for-profit, sector-neutral and non-party political, national organisation. ASFA’s mission is to continuously improve the superannuation system so people can live in retirement with increasing prosperity.