Australia’s largest investment consultant believes the government’s superannuation reforms are “heavy-handed” and that “there isn’t a problem to fix”.
The Your Future, Your Super reforms will subject funds to an annual performance test and block underperformers from taking new members in a move the government hopes will clean up super. But JANA – an investment consultant to many of Australia’s largest funds – believes the reforms are “overly simplistic” and will have significant negative impacts on member outcomes.
“Whilst there is always room for improvement, I’d argue our system has, by global standards and in aggregate, produced strong long term net returns, provides access to a wide range of financial services, and provides members a reasonable retirement income,” said JANA principal consultant Matthew Griffith.
“This is not a crisis. This is not just JANA’s view, but is also a view shared by many other global researchers, consultants and practitioners who consider Australia’s retirement system to be amongst the best in the world in terms of long-term net investment outcomes, population coverage and projected retirement outcomes.”
JANA believes the reforms will promote an “averageness mindset” as funds are driven to be within 0.50 per cent of an index benchmark and blunt enthusiasm for adopting points of difference that could be beneficial to members. Mr Griffith also blasted the reforms as “heavy-handed” and “interventionist”.
“We all want a high-performing industry, but the ink has barely dried on recent regulatory innovation, and this includes a wider range of measures more appropriate for a holistic measure of fund performance (given funds are a bundle of products and services, not just investments),” Mr Griffith said.
“We’re all for continued evolution of the system for better member outcomes, but continued tinkering with the rules undermines confidence in the system and provides significant challenges for mum and dad retirees attempting to plan for their retirement over long horizons.”
However, Mr Griffin voiced his support for the other measures contained within the budget, including the “stapling” of accounts.