After an initial review of the Financial Services Inquiry recommendations released this morning, it is clear that FSI chairman David Murray’s reforms, if implemented, will improve the efficiency of the superannuation sector while improving retirement outcomes for members.
Reece Agland, Superannuation Products and Services Manager at Taxpayers Australia, said: “From a superannuation point of view the most radical proposal is to require APRA funds to pre-select a comprehensive income product for members in retirement.
“Currently we have mandated rules around contributions, but when people retire there is little to no guidance on how best to prepare for retirement. Account based pensions are fine for those with financial literacy and can afford a financial planner, for others it is a complication they would be better without. Mandating a retirement income product in a fund will ease this burden while also better protecting members from market fluctuations, while permitting choice for those that want it.
“We strongly encourage the government to adopt this proposal.”
Superannuation Australia, a wholly owned subsidiary of Taxpayers Australia Limited, also supports the following changes proposed by the Murray report:
– Competitive tendering for MySuper products
– Providing all employees the ability to choose a fund
– Mandating majority independent directors on boards of APRA funds including an independent chair
“The revelations about CBUS Super illustrate the importance of appropriate rules about conflict of interest in superannuation funds,” Agland said. “Mandating majority independent directors on boards of APRA funds including an independent chair is the best way to achieve this.
“Competitive tendering for MySuper products will improve competition and drive down costs, while taking the superannuation system out of the industrial relations system where it does not belong. There is no need to wait until 2020 for a PC review.”
The FSI should be congratulated for its proposals to improve the superannuation system and Taxpayers Australia encourages their adoption wholly across the political landscape.
