ASFA urges caution on PC report

Any changes to Australia’s superannuation system flowing from the Productivity Commission’s latest draft report need to acknowledge the world-leading nature of the existing regime and the diverse needs of members, according to the Association of Superannuation Funds of Australia (ASFA).

While welcoming some elements of the PC report, ASFA has warned that the recommendations, if implemented, have the potential to materially transform the industry.

“The proposal to allocate default superannuation to ten so called ‘best-in-show’ funds would dramatically change the retirement funding landscape, and raises questions with respect to innovation, competitive intensity and diversity,” ASFA chief executive, Dr Martin Fahy said.

He pointed out that Australia has a world-class superannuation system and that the PC’s draft report had acknowledged that the majority of members and assets in the system were in products that had performed reasonably well.

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“What’s more, only a small share of members are dissatisfied with their fund’s performance,” Fahy said.

“Any changes to the system need to recognise the diverse needs of fund members,” he said. “Members’ needs differ widely, including with respect to their occupation and their location.”

“In particular, many smaller funds are able to provide niche offerings to their members, including tailored insurance and investment options, and the importance of this to members should not be underestimated.”