Super bodies mostly supportive of FSI recommendations
The superannuation industry has applauded the Financial System Inquiry report's proposal to tackle income stream barriers and enshrine super goals, with industry bodies confident the recommendations will herald sustainability.
The removal of regulatory impediments to income steam products was heavily endorsed by the Association of Superannuation Funds of Australia (ASFA), who said it will open up the innovation playing field.
"As the report recognises, there is no ‘one-size-fits-all' approach when it comes to providing income stream choices for retirees," ASFA CEO Pauline Vamos said.
ASFA has previously identified six types of income stream on a spectrum between default and comprehensive, but said the system greatly inhibited the variety of products on the market to meet those retirement needs.
The Australian Institute of Superannuation Trustees (AIST) was particularly pleased with the recommendation to enshrine super objectives in law to remove short-term political influences.
"This is a much-needed reform to protect the super savings pot — now worth $1.8 trillion — from endless Government tinkering and provide certainty for people trying to plan for their retirement," AIST CEO Tom Garcia said.
"We should not underestimate the profoundly stabilising effect this would provide."
Both bodies supported the recommendation to give MySuper time to be implemented and deliver its promised efficiencies, with Vamos adding it would "go some way to reducing costs and the delivery of the system".
However, Garcia was critical of the recommendation to instill a fixed independent quota on super boards, with AIST further dissatisfied with the inadequate definition of independence.
He said it ran counter to international best practice.
"There is no evidence to suggest that forcing structural change to the boards of not-for-profit funds would deliver better outcomes to members," Garcia said.
"These funds already significantly outperform with all but two of the top 50 funds over the last decade adopting the equal representation system of governance."
