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.
One in four Australians will outlive their retirement savings by more than 10 years. Longevity risk - the risk of outliving your savings - is one of the biggest economic and social issues facing ... Watch video
We invite you to watch our latest video featuring Sebastian MacKay, Investment Director, Multi Asset Investing at Standard Life Investments.
In this short 2 minute clip, MacKay discusses the key objectives ... Watch video