The federal government has asked the Productivity Commission to review all aspects of the superannuation system, including SMSFs.
“I can announce that the Treasurer [Scott Morrison] and I are today releasing the terms of reference for the Productivity Commission’s review,” Assistant Treasurer Kelly O’Dwyer told the SMSF Association National Conference in Adelaide today via video message.
“Briefly, the first stage of this review is about developing criteria to assess the superannuation system’s efficiency and competitiveness.
“The second stage is about developing alternative models for allocating default fund members to products.
“The final stage, informed by the first two, will look at the efficiency and competitiveness of the entire system once the MySuper reforms have been fully implemented, sometime after 1 July 2017.”
O’Dwyer said it was important to note the Productivity Commission review would be of the entire system, not only default funds.
“So this review is very relevant to SMSFs, a sector growing in importance within the superannuation system as a whole,” she said.
“I also want to stress that there won’t be a moratorium on the government proceeding with superannuation reform while the review is going on.
“This review is not about delaying change. It’s not about making sure that we can’t get the best superannuation system. It’s about making sure that the system is dynamic and fit-for-purpose in the modern world.”
The SMSF Association welcomed the government’s move and viewed the review process, which was recommended by the Financial System Inquiry, as an opportunity to ensure the superannuation system continued to meet the needs of Australians.
“Although there is no doubt our superannuation system is robust, as evidenced by being ranked third in the world, it is important to continuously evaluate it and find ways to improve it,” SMSF Association chief executive Andrea Slattery said.
“This is especially important for those who are least engaged with their superannuation and are placed in default funds by their employers.
“It is critical the superannuation system is efficient and best serves these members’ interests in growing their retirement savings by reducing fees and increasing returns.”
Slattery said the association looked forward to contributing to the review.
O’Dwyer also said Australians planning for their retirement wanted to make sure the money they were forced to contribute was being managed in their best interest.
“That’s also what guides the government’s reforms to the superannuation system – putting superannuation consumers first and getting better retirement outcomes for all Australians,” she said.
“The Murray inquiry told us that our system is good but could be better.
“At around $2 trillion, our asset pool is well over 100 per cent of our GDP (gross domestic product) and it’s projected to grow to over $9 trillion in the next 20 years.
“By that time, it may exceed the size of our entire banking sector, so we’re talking about a system of immense value socially as well as in dollar terms.
“That’s why it’s vital that it works and works as efficiently and effectively as it can.”