The presence of systemic problems in retail and industry superannuation funds is evidence members are not being served first by those providers, while SMSFs have shown very few issues despite a series of reviews, according to a Liberal senator.
New South Wales Liberal Senator Andrew Bragg made the comments today in a webinar presented by the Financial Services Council, where he argued the government should run a centralised default superannuation fund, based on the Future Fund, as the government was already invested in super via funds for public servants and the military.
“We are so invested in this scheme [super] as a nation we need to get the best deal possible as we are compelling people to put 10 per cent of their wages in this scheme and we should have a cheap and cheerful product,” Bragg said.
He added retail and industry funds had a place in the superannuation sector, but had not delivered at a level that was best suited to members.
“If you go through the Hayne royal commission, [it] did a huge number on the retail funds, and the COVID-19 crisis has been a disaster for the industry funds,” he said.
“In both cases you see Margaret Thatcher’s line coming into life about other people’s money,” he added, referring to a comment from the former United Kingdom prime minister that “socialist governments always run out of other people’s money”.
“It [superannuation] has been treated really poorly, in my view, because of this principal agency approach.
“The funds that have done really well are the self-managed funds. It is very hard to find major systemic problems there because people are, effectively, running their own race.”
Bragg returned to the benefits of SMSFs later in the webinar, when he highlighted their ability to create joint accounts for spouses within a single fund.
“Joint accounts are a good way to get fees down and I am of the view we should have larger SMSFs,” he said, acknowledging that 85 per cent of SMSFs were held by married couples.
“The SMSFs have done well and not had any major reputational issues and all the reviews of those schemes appear to given them a clean bill of health.
“One of the reasons I like SMSFs is they are a good way of taking control of your own destiny, which is a healthy thing as there has been too much principal agency cost in the super system.”
New research from Roy Morgan also found that SMSF members were more satisfied with their choice of superannuation vehicle than retail and industry fund members.
