AMP Limited has warned that the Government’s Your Future, Your Super (YFYS) legislation could give rise to the formation of between four and six dominant superannuation funds in Australia with a commensurate lessening in competition.
AMP has supported the objectives of the Government’s legislation but is arguing strongly that the manner in which it has been formulated means those objectives will not be met.
What is more, AMP has joined the chorus of voices asking the Government to delay implementation of the legislation to create time to deal with its inherent problems.
“Importantly, these proposals represent a fundamental change in the approach by which individuals choose their superannuation accounts. That choice should be based on assessments of the highest integrity and guided with appropriate information to achieve the intended policy objective,” the AMP submission to the Senate Economics Legislation Committee said.
“The YFYS changes will also alter the structure of the superannuation industry over the coming years and could result in the emergence of four to six dominant superannuation funds. Such an outcome would result in a lessening of choice and competition and potentially less liquid funds with higher risk profiles,” it said.
“We believe that the YFYS policy is being introduced with undue haste. We are concerned by the lack of consultation before the release of the proposals in October 2020, despite there being significant divergence from the Productivity Commission recommendations, and with insufficient time for the industry to now adequately respond before proposed commencement.”
“As a consequence, we consider that the Government should pause before implementing the policy, undertake a policy impact analysis and ask the ACCC (Australian Competition and Consumer Commission) to undertake a competition analysis so that the community will have certainty about the long-term impacts,” the AMP submission said.
“The bill can at this stage be considered as no more than a framework with many critical components missing. The legislation is set to commence on 1 July this year (i.e. approximately 3 months) and without the regulations there remains great uncertainty and an inability for the industry to determine and respond to the real impacts of the YFYS policy. For this reason alone, the bill’s commencement date should be delayed by at least 12 months.”
