The federal government’s reform packages could create a level playing field for Australia’s industry and retail superannuation funds, with funds set to become very similar, a legal superannuation expert has predicted.
Minter Ellison partner Maged Girgis said key elements of the government’s Future of Financial Advice (FOFA) reforms and its review of the country’s superannuation system, including the creation of MySuper, could place industry funds and retail funds on an equal footing.
“One of the interesting by-products of this [FOFA], coupled with the Cooper reforms and Stronger Super reforms, is that the traditional differentiator between retail funds and industry funds has now been removed,” Girgis said at a luncheon in Sydney earlier this month.
“With Stronger Super and MySuper accounts, what you’ve got now is conflicts of the two into the [same] market … coming together and almost looking very similar.”
In line with the changes, he said the industry super fund sector’s compare the pair marketing campaign would become irrelevant as soon “the escalator will be going the same way”.
“Looking forward, if we run with the theme of what the industry will look like in three years’ time, industry funds will start to look a lot like retail funds and retail funds will look a lot like industry funds, which is very interesting,” he said.
When asked whether the predicted similarities between the industry and retail sector would add to the pressure of nominating default funds, he said it would.
“It feeds straight into it. This is where you’ve almost got a levelling of playing field but for the fact that one half of the field is shut off effectively to the other half,” he said.
The government, through Assistant Treasurer Bill Shorten, released its response to the Super System Review in December last year.
