The Budget measure that will block underperforming superannuation funds from taking new members is draconian, overly simplistic, and will promote index relative mediocrity, according to JANA.
JANA principal consultant, Matthew Griffith, said the move would reduce industry innovation and reduce the appetite for trustees to be different.
The approach, he said, was heavy-handed, interventionist, and ignored natural market forces and regulatory changes which had in the past resulted in heightened competition, consolidation, and pressure to maintain strong member outcomes.
“The ink is barely dry on recent regulatory innovations that are focused on member outcomes, creating heightened uncertainty with respect to retirement policy stability for members and the industry,” Griffith said.
“Further, this proposed change will potentially drive the market towards an oligopoly structure made up of ‘index huggers’ and mean more mediocre results for members.”
Griffith noted that the test only assessed funds on one criteria, the constant tinkering of super rules undermined confidence in the system and provided challenges for retirees attempting to plan for their retirement over long time horizons, and that this would prompt more extreme progression towards industry consolidation.
“We fear that the drive to be within 0.50% of an index benchmark will result in an ‘averageness’ mindset that might blunt enthusiasm for adopting points of difference which may be truly beneficial to members over the longer term,” he said.
In a recent statement, Shadow Assistant Minister for Home Ownership and Liberal Senator for New South Wales, Andrew Bragg, accused 'Big Super' of fabricating data attributed to the Reserve Bank of Australia to push their agenda.
A “concerning” number of Aussies don’t know what they pay in super fees, a young super fund has said.
The corporate regulator has shared some ‘disappointing’ findings upon reviewing the public communications of more than 20 trustees with regards to death benefits.
According to the industry body, funds should have an obligation to transfer members in failing products to better-performing products in a timely way.
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