Stronger Super - both good and bad
The Federal Government’s Stronger Super legislation has gained a mixed response from the financial services industry, with some elements being welcomed while others, particularly elements of MySuper, being viewed as a disappointment.
While the industry superannuation funds broadly welcome the Strong Super package, the reactions from the retail and institutional sectors were more diverse, with the Financial Services Council (FSC) welcoming some of the improvements from the original proposals, the Financial Planning Association (FPA) was less enthusiastic, particularly with its impact on advice delivery.
FPA chief executive Mark Rantall warned that the package might ultimately fall short of its original objectives and questioned whether the MySuper arrangements would be sufficiently transparent with respect to fees applying to the delivery of intra-fund advice.
For its part, the Self Managed Super Funds Professionals’ Association expressed disappointment that the changes had included a ban on off-market transfers with respect to self-managed superannuation funds (SMSFs) – something which it said would place the SMSF sector “at a significant disadvantage compared to other superannuation funds”.
The Federal Opposition spokesman on Financial Services Senator Mathias Cormann also said the Stronger Super package had fallen short because it had failed “to address the current closed shop, anti-competitive arrangements in the default workplace superannuation markets”.
As well, Cormann said the package had failed to address key corporate governance issues, including trustees sitting on multiple industry superannuation fund boards.
FSC chief executive, John Brogden welcomed the fact the Stronger Super package had allowed for variable pricing within MySuper, tick a box account consolidation and appropriate risk-basked capital requirements for superannuation funds.
Australian Institute of Superannuation Trustees chief executive Fiona Reynolds said it was important to understand that a core element of the reforms – the launch of MySuper – was not about ‘dumbing-down’ super.
“At last we have a timetable to rid commissions from default super funds. For many Australians super will become more cost-effective, more comparable and easier to understand,” she said.
Industry funds political lobby group Industry Super Network also referenced the payment of sales commissions to financial planners and also signalled it would be pressing the Government to tighten the final policy parameters around multi-pricing arrangements to prevent "super savings being flipped into more expensive products".
AUTHOR
Mike Taylor
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