Speaking recently at the Association of Superannuation Funds of Australia (ASFA) conference, Minister for Superannuation, Financial Services, and the Digital Economy Jane Hume lamented the amount of resistance Government has encountered with respect to superannuation reform.
She described super as “the most frustratingly partisan sector of financial services,” although qualified this by noting that the resistance was largely coming from industry bodies rather than the funds themselves. “What I hear from chief executives and from boards,” she explained, was completely different to what ends up “in newspapers”.
“This is my greatest frustration,” she said.
Describing these industry bodies as the “super industry lobbyist leviathan,” Hume said they collectively prefer to discuss legacy and philosophy rather than reforms that would improve efficiency – in this case referring specifically to the Your Future, Your Super legislation.
These reforms, Hume added, “will change the dynamic in which the system operates – it will make it more efficient and more transparent. It will provide competitive tensions to lower fees and improve investment performance and will also fulfil the Hayne Royal Commission recommendation with stapling one account that travels throughout a member’s working life.”
One industry body that took the Your Future, Your Super reforms to task late last year was the Australian Institute of Superannuation Trustees. In a submission, the AIST called out the implicit “Government overreach” in the changes the draft legislation makes to parts of the SIS Act.
The AIST argued that there is “no reasonable basis to institute a law or regulation which gives Government the power to unilaterally intervene in the operations and investments of superannuation funds that are discharging their duty to operate in the best financial interests of members.
“It is well-established that as a matter of principle governments should remain at arm’s length from investment decisions.”
In an AIST webinar, Australian Council of Trade Unions assistant secretary Scott Connolly further criticised the best interests duty provisions in the Your Future, Your Super legislation, saying: “The specific and warrantless exclusion of dividend payments to parent companies from being required to comply with the newly worded best financial interest test means this bill is shockingly hypocritical and unfair.”
He added: “This will allow for-profit funds to advertise without obligation, engage in political advocacy or make political donations. The passage of this Bill would create a wholly uneven market for superannuation funds, especially when combined with other aspects of the package, like the exclusion of administration fees from benchmarking.”
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