The government’s budget recommendations to consolidate super accounts, protect small account balances and make insurance ‘opt in’ for younger Australians make a lot of sense, says SuperRatings chief executive Jeff Bresnahan.
But that is in stark contrast to the Productivity Commission’s (PC) draft report into the superannuation sector, which has recommended the decoupling of default funds from industrial awards and the establishment of a top 10 ‘best in show’ list that would be constructed by an independent panel, Mr Bresnahan said.
“It may sound nice on paper but it’s completely unworkable,” he said.
Mr Bresnahan’s comments come after BT Financial Group chief executive Brad Cooper decided to embrace the PC report’s recommendations on Thursday.
The first problem with the ‘top 10’ idea is finding an expert panel that is at once ‘independent’ and ‘fully informed’, Mr Bresnahan said.
“Given that we cannot even agree on what constitutes an ‘independent’ director on a trustee board, what hope do we have of finding an ‘independent’ panel? Zero,” he said.
“Further, then trying to get that ‘independent’ panel to agree on an assessment model that encompasses investment returns, fees, insurance structures and costs, member and employer servicing, advice structures and fund governance has the same zero chance of success.
“If the industry after 25 years still can’t agree on the most simple issue such as what is a growth asset and what is a defensive asset, then what hope [has] an expert panel got of agreeing to an assessment model that should encompass upwards of 300 individual measurements?” Mr Bresnahan asked.
Superannuation was set up in a free market environment and it ought to stay that way, he said.
“With the appropriate tweaks, including what was suggested in the budget, the system will continue to provide great benefits for Australians and our economy. The actual collection of outstanding super is way more important than trying to manipulate an open market environment.”
The PC review is unlikely to yield anything material to Australians, Mr Bresnahan said.
“We have had countless examinations into the superannuation system over the years but due to subsequent political and industry interference, not one of them has yielded meaningful benefits to consumers. The PC report will ultimately fall into that bucket for the same reasons,” he said.
