The FPA has raised issues with certain elements of the MySuper proposal contained within the federal government’s Stronger Super package released yesterday.
The association was worried MySuper could allow superannuation funds to charge “indiscriminately and invisibly” on intra-fund advice, FPA general manager of policy and government relations Dante De Gori said.
“We think obviously in fairness, equity and transparency for fund members, intra-fund advice cost should be disclosed,” De Gori told InvestorDaily.
Another concern was that existing corporate superannuation schemes that already met the low-cost and efficiency standards MySuper demanded would be unfairly forced to close.
“A lot of big corporate super plans have some real efficiencies and Rice Warner research has shown that those funds often have lower fees than industry funds,” De Gori said.
“A lot of them are already delivering the outcome that MySuper is intending to deliver, so why shouldn’t they be allowed to remain in place? We think it’s unfortunate that some of the better corporate super funds will have to be converted to MySuper.”
He also said it was ironic compulsory consolidation of superannuation accounts under $1000 would be on an opt-out requirement rather than opt-in, which was being imposed on financial planners as part of the Future of Financial Advice reforms.
“It seems that we want members to consent for advice but not for which superannuation funds they want to be in,” he said.
“This is particularly concerning in respect to insurance cover being cancelled without member consent. This would be further exacerbated if the proposal to increase this measure to apply to accounts under $10,000 from 2014 goes ahead.”
Financial Services Council (FSC) chief executive John Brogden said the package was a “big win” for a more competitive and flexible MySuper.
“The FSC welcomes the announcement that variable pricing will be allowed in MySuper, the new default superannuation system, and that funds will still be able to tailor investment strategies to meet the demographics and demands of large workplaces,” Brogden said.
MLC & National Australia Bank (NAB) Wealth group executive Steve Tucker said the opt-out consolidation measure for accounts under $1000 was sensible and should drive efficiencies across the industry.
“It should also help superannuation members who have accumulated multiple numbers of small, inactive accounts which are being eroded by fees,” Tucker said.
