The Productivity Commission (PC) has made clear that it will be looking well beyond just superannuation funds in developing its report into the efficiency and competitiveness of superannuation in Australia.
The Commission today released a draft report detailing the proposed framework to assess the efficiency and competitiveness of the system but, in doing so, pointed to the enormous scale of the exercise stating, “The system is bigger than just the superannuation funds (the industry)”.
The PC said the system “encompasses many horizontal and vertical relationships on the supply side, decisions of members on the demand side, and actions of regulators on both the supply and demand sides”.
It said the unique features of the system made it complex and that there was little precedent (including internationally) for what this study is trying to do, or for the ultimate assessment itself. “Most studies of the efficiency of the Australian superannuation system have focused on operational efficiency and matters that readily lend themselves to measurement (such as returns and fees). The system-wide perspective is unique and makes this a challenging task,” it said.
“Our superannuation system is large, complex and has broad reach. This means even small system improvements can offer significant financial benefits to Australian workers, particularly in their retirement,” Commission Angela MacRae said.
“We have developed a framework that will allow us to assess how well our super system is able to meet its primary purpose of providing retirement income,” she said.
Productivity Commission deputy chair, Karen Chester said the draft report represented the first important step in the PC’s work.
“Undertaking a system-wide assessment of the competiveness and efficiency of our super system is challenging and novel. It has not been done before. Getting the foundations right matters most — and we know there are no silver bullets,” Chester said.
