Fund leakage to the self-managed superannuation fund (SMSF) sector is an indicator of what consumers want in superannuation and a sign that many have assessed the merits of retail, corporate and industry offerings and rejected them in favour of another option, according to Challenger chair of retirement income Jeremy Cooper.
Speaking at a panel session at the Citi Investment Conference earlier this week, Jeremy Cooper stated more people were choosing SMSFs because they were aware of what established funds were offering — which in turn offered insights into how these funds should respond.
"It is a healthy battle and one of the rare occasions in this industry when the customer gets the choice and competition. As a result we have seen large funds emulating the customer experience in the self-managed space," Cooper said.
"We also need to consider what SMSFs are. They are a wrapped vehicle for retirement with a structure for efficient tax outcomes, and it is up to the rest of the industry to compete with that — so it is a healthy shakeout of what the customer wants."
While SMSFs were also able to use negative gearing, franking credits and capital gains tax benefits inside their structures, these were issues that were too problematic for any government to address, according to Cooper.
He said that while the previous Federal Government had formed a cross-industry working group to tackle policy issues within the area of superannuation and retirement income, it was unlikely the present Government would make policy changes in these areas.
"We looked at whether policy around superannuation could be governed by an independent body, and filter all policy proposals for super through considerations around taxation and access to super and so on. These kind of issues — changing franking credits, changing the CGT exemption on the family home, and negative gearing — are probably too toxic for any government to seriously look at," Cooper said.
"I am not saying they are not important issues, but if we had a body that was independent of politics it could highlight the options and look at addressing these while getting a benefit somewhere else.
"But there are a handful of issues that are so toxic that can't be dealt with — and a working group is only place to have a thrash around and look at them."
