The Financial Planning Association (FPA) believes the SuperStream changes announced by the Government will help 'future-proof the system', but has expressed doubts that the MySuper regime will help meet retirement income needs of the majority of Australians.
FPA chief executive Mark Rantall was also pleased the Government had put a timetable in place to transition the industry to the MySuper environment, irrespective of the FPA's position on the new default fund rules.
"However, we need to remember that the original remit of the Cooper Review was to ensure that Australia's superannuation system was operating in the most efficient manner and in the best interests of fund members," Rantall said.
"The latest MySuper reforms may not necessarily meet those lofty standards," he added.
The biggest concern for the FPA was that MySuper would deliver a false sense of security to Australians, especially considering MySuper could potentially leave some Australians with a benefit as small as $40,000 at retirement, Rantall said.
"Retirement income adequacy is the real issue in superannuation, which MySuper fails to address and could, in fact, damage," he said.
The FPA had three major concerns about MySuper: it could allow funds to charge indiscriminately for intra-fund advice; existing superannuation schemes that already meet the MySuper requirements could be unfairly forced to close; and automatic consolidation of accounts under $1,000 (and under $10,000 from 2014) could lead to insurance cover being cancelled without member consent.
The potential for MySuper to lead to disengagement from superannuation was a major worry for Rantall.
"It would be unfortunate if MySuper causes consumers to lose interest in seeking help to manage their retirement savings. Professional financial advice is critical to producing better superannuation outcomes," Rantall said.
The Financial Services Council (FSC) was more positive about the Stronger Super changes, with chief executive John Brogden congratulating the Government for consulting widely with the industry.
"With Stronger Super, the Government has landed on a balanced and measured package. The improvements announced today are a big win for a more competitive and flexible MySuper," Brogden said.
In particular, Brogden was pleased the Government had adopted the FSC's recommendation for 'tick-a-box' account consolidation for accounts over $1,000.
The FSC was also pleased that workplaces with more than 500 employees would be given access to variable pricing and tailored investment strategies from superannuation funds.
