The Australian superannuation industry is large but fragmented. Costs have fallen with the introduction of MySuper and they will fall further once SuperStream is complete. However, there remain critics who claim that the system needs a shake-up and that further economies of scale can be realised.
In its final report (November 2014), the Financial System Inquiry noted that “the superannuation system is not operating efficiently due to a lack of strong price-based competition“.
Amongst several significant recommendations for change in the superannuation industry, it gave notice that more efficiency is needed or a new system of allocating new default fund members into MySuper products would be required – “unless a review by 2020 concludes that the Stronger Super reforms have been effective in significantly improving competition and efficiency in the superannuation system“.
Clearly, it is important to develop a sound mechanism for measuring both competition and efficiency or this review cannot be undertaken objectively. Consequently, in February this year, the Treasurer commissioned the Productivity Commission (‘Commission’) to conduct a study in two parts.
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