The greatest threat to Australia's $2.5 trillion superannuation system is regulatory overreach and strangulation in red tape.
This was the takeaway message from Association of Superannuation Funds of Australia (ASFA) independent chair Michael Easson in his opening address at this year's major conference in Sydney.
Being careful not to criticise what he described as the "necessary regulation" by the people at APRA, ASIC and the ATO, Easson said prudential standards must strike the right balance to allow the superannuation industry to thrive.
"Every extra board paper at a superannuation meeting dealing with a new regulation, every new form to fill in by the CEO, the CIO, the CFO, is time wasted on spending time on innovation and creativity," Easson said.
By way of example, Easson pointed to a series of media reports which broke in the weeks leading up to the conference, which among other things, discussed areas where superannuation funds could make further investment, including long term debt markets, emerging industries, and infrastructure innovation.
"Let's explore and realise the finest of those ideas - always along the way ensuring that any investment decisions are in the best interests of members," Easson said.
"Every time that we force attention on a new form - and cumbersome reporting requirements - we detract attention from the things that matter."
Conversely, Easson dismissed former Federal Treasurer Peter Costello's notion that the Future Fund could take over the investment management of default superannuation, pointing to figures released by ASFA's director of research Ross Clare today that on a five-year return basis and adjusting for taxation, $1 invested into the Future Fund in June 2012 would have returned $1.67 at June 2017. Comparatively, the average superannuation fund would have returned $1.64.
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"Some wild and radical ideas need to be vigorously contested," Easson said.
"Scores of superannuation funds perform more strongly than just the average, and unlike the Future Fund, we have the mandated challenges of income streaming, individual reporting and a host of regulatory requirements.
Easson challenged delegates, over the course of the conference, to face challenges head on with energy and thoughtfulness.