ASFA disappointed by PC’s final report

The Association of Superannuation Funds of Australia (ASFA) has expressed disappointment with the Productivity Commission’s final report into the competitiveness and efficiency of superannuation arguing many of its elements will serve to undermine the strength of the system.

ASFA chief executive, Dr Martin Fahy said the PC’s core recommendations relating to default superannuation contributions and the nature of superannuation fund membership would dramatically change Australia’s retirement income landscape and not necessarily for the better.

“ASFA is disappointed that the PC has doubled down on the so called ‘top 10 best in show’ as a mechanism for allocating default super,” he said. “This approach risks creating an oligopoly in default superannuation and reducing long term competition.”

However, Fahy acknowledged that the report had confirmed the overall strength and relevance of the Australian superannuation system, including the importance of compulsory contributions and universal coverage of employees.

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“In particular, the evidence contained in the report highlights that the vast majority of funds are delivering very good value to fund members as well as providing broader favourable economic impacts,” he said.

Fahy said the Commission’s recommendation to carry out a broad review of the retirement system prior to moving the Superannuation Guarantee to 12 per cent, flew in the face of evidence.

“Superannuation has kept the fiscal burden of the age pension below three per cent, allowed Australians to save $800 billion more than they otherwise would have and will deliver higher retirement incomes for millions,” he said.

Fahy indicated, however, that there were no grounds for complacency and that the PC recommendations needed to be considered in the context of a number of changes that were already in train as a result of the hearings of the Royal Commission and policy review by the Government more generally.

He said the overall goal of any changes should be to produce better outcomes for fund members.