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MySuper comparisons must exclude services: AIST
MySuper products should only be compared based on the net returns they deliver to members, says the Australian Institute of Superannuation Trustees (AIST).
In a submission to the Government on the recently announced Stronger Super changes, the AIST has argued ancillary services such as financial advice, insurance and online services should be completely excluded from the comparison of MySuper products.
The AIST denied that such services should form part of a member's financial interests, arguing that they "do not directly improve net returns".
"It would be an unsatisfactory outcome if the comparison model resulting from this requirement ended up looking like those currently used by superannuation ratings agencies," the submission said.
But at the same time, the AIST argued that beneficiaries should not have the right to pursue compensation (under the contravention of scale requirements) if their fund achieved lower net returns than another fund.
"A net annual return comparison is counterintuitive to the long-term nature of superannuation investment, and accordingly should not be a factor in creating a cause of action for individual fund members, of a potential class action," the submission said.
The AIST also called for further protections for responsible superannuation entities (RSEs) from the cancellation of a MySuper authorisation by the Australian Prudential Regulation Authority (APRA).
"Cancellation of a MySuper authorisation (or an RSE licence) will result in lasting damage to a fund and the reputation of its directors, even if it is subsequently overturned," the submission said.
The AIST also recommended that the new concept of a 'prudent superannuation trustee' be abandoned, since "it appears to be higher and different from the 'prudent person of business' test". The submission referenced the separate 'office of superannuation trustee director' which was rejected in the Stronger Super consultation process (partly because it had no been tested in law).
Finally, the submission expressed some concerns about the new power granted to APRA to issue prudential standards for superannuation.
"The prudential standards making power is very wide, and could be used to circumvent parliamentary processes unless further protections and limitations are included in the legislation," the submission said.
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