The federal government is committed to completing its reform timetable within the superannuation sector but has criticised fund trustees for their inertia when it comes to making changes ahead of government.
Addressing the Financial Services Council Summit 2019, the Assistant Minister for Superannuation and Financial Services Jane Hume said “if the government is going to compel people to quarantine almost one dollar in every ten of their income today to be put away, saved and invested for up to 40 years, then the government has an obligation to ensure that the compulsory system must be efficient and work in its members’ interests”.
The comment was made in reference to a number of recommendations that came from the Hayne Royal Commission and the Productivity Commission including reducing unnecessary insurance in super; eliminating multiple accounts, closing down under-performing funds, improving the governance of super fund board and creating income products in retirement beyond account based pensions.
Hume said the changes had been enacted or were close to being so and criticised some parts of the superannuation sector for admitting there were problems only as the legislation was passing through parliament.
“It’s only now – with the writing on the wall, where it looks like the numbers are there to pass this reform to eliminate unnecessary insurance – that I have a whole bunch of industry players acknowledging ‘we agree something has to be done about this’,” Hume said, adding “To which I say ‘well where were you?’”
“If there’s one thing that adds fuel to the perception that the superannuation sector, for all its talk about putting members first, is in reality beset with complacency and inertia, it’s this.”
“Why isn’t the industry taking action itself on long-standing problems we all know are there, instead of waiting to be dragged kicking and screaming by government towards a solution?”
Hume pointed out that superannuation funds did not escape criticism at the royal commission where 15 recommendations were made to improve it, and the government was committed to making the changes.
“We are going to implement these changes, because for a government to do anything less is a failure of its obligation to Australian workers and retirees,” Hume said.
“We are going to reframe the superannuation system so that it works for members – not just first and foremost – but solely.”
“It’s a system that has grown exponentially but not efficiently, because for too long it has relied upon opacity, complexity and disengagement, and the sacred cows of its origins in industrial relations.”
“If trustees are meeting the presumption of their title and the expectations of members, they will be at the forefront of these changes, leading the way, and will not have to be dragged kicking and screaming to member’s best interests.”