Register  
RBA questions super fund infra investment
Thursday, 3 April 2014 12:40pm

The Reserve Bank of Australia (RBA) has questioned the role of superannuation funds boosting funding for infrastructure investment, saying that it is not appropriate to mandate funds to invest in assets to meet "broader national objectives."

In its submission to the Financial System Inquiry (FSI), the central bank said that rather than superannuation funds being forced to invest in infrastructure assets, trustees should manage their investments with the member in mind.

"The bank does not support suggestions that investment allocations could be imposed to meet funding targets for certain sectors and/or asset classes. Superannuation assets should be managed in the best interests of their members," the submission said.

In its 249-page submission, the RBA also urged the Murray inquiry to cut the cost of superannuation.

It said that currently the operating costs of Australia's superannuation funds are higher than in many in many other Organisation for Economic Co-operation and Development (OECD) countries, partly due to the defined contribution (DC) nature of Australia's superannuation system.

"While part of this is likely to flow through to relatively high fees, disengagement among members, as well as complexity and difficulty in making comparisons of fees across funds are also likely to play a role.

Accordingly, consideration should be given to ways that competitive pressure may be placed on the fees charged by superannuation funds to end users," the submission said.

The RBA also called into question superannuation fund liquidity.

"The bank would support consideration of whether the system could be improved. Areas the inquiry could focus on include whether superannuation funds are appropriately balancing the liquidity of their liabilities and their investment profiles, and whether the fees and cost structure of managing Australians' retirement savings are reasonable," it said.

"It cannot be forgotten that the objective of the superannuation system is to provide income in retirement. More broadly, it is worth the Inquiry considering whether the current arrangements enable households to tailor their superannuation savings to suit their risk preferences and investment horizons at a reasonable cost."

Read all Financial Standard coverage of the Murray inquiry here.

Blogs
Follow the industry experts.
Christopher Page
Christopher Page
Managing Director

Medcraft's appalling speech
I am surprised. More than that, I am astonished, shocked. Last week I was left speechless by the address that the Australian Securities ...read more
 
Benjamin Ong
Benjamin Ong
Chief Economist

Reflation, rotation and the taper
'Tis being my final type (drivel, to some gentle readers) for the year, we'll take a look back at the 2013 that was to seek the lessons ... read more
 
Alex Dunnin
Alex Dunnin
Director of Research & Editorial Services

Fear and hatred is what I want for Christmas
Many years ago when I started work as a country school teacher students would often moan about how they thought it was unfair that ... read more
News Search   
VideoBrought to you by
State Street Global Advisors SPDR S&P 500 ETF
We invite you to watch our latest video program on FSiTV featuring State Street Global Advisors (SSgA) head of SPDR ETFs Amanda Skelly, as interviewed by Mark Smith, deputy editor of Financial Standard. In ... Watch video
Adviser Efficiency
The secret sauce to an enduring adviser-and-client relationship changes from time to time. One minute it's about the adviser's ability to provide expert advice around investments and the next minute, it's ... Watch video
Why Multi-Asset Solutions?
Joe Fernandes, Head of Global Investment Solutions at Colonial First State Global Asset Management talks about the advantages of objective-based investing in the multi-asset space. Watch video
Get it
Daily
FREE to your inbox, get the Financial Standard Daily Email.
Get the Free
iPad app
Download the Financial Standard iPad app for FREE
Industry
Events
DEC
20
JAN
28
Financial Standard Chief Economists Forum 2015 - Sydney
30
Financial Standard Chief Economists Forum 2015 - Melbourne
MAR
25
Digital Marketing for Banking & Financial Services 2015 Summit
FEB
02
The Diversity Dividend - The Male Champions Of Change
03
Hobart GenXt National Roadshow 2015
News
Bites

$245 (inc GST) for 1 year
 
 
Copyright © 1992-2014 Rainmaker Group
All material on this site is subject to copyright. All rights reserved. No part of this material may be reproduced, translated, transmitted, framed or stored in a retrieval system for public or private use without the written permission of the publisher.
Link to something bpUZTilV