The Turnbull Government is the latest administration to announce a superannuation inquiry to investigate efficiency of the system and review how default funds are selected.
A statement jointly released by Treasurer Scott Morrison and Assistant Treasurer Kelly O'Dwyer said: "We have tasked the Productivity Commission (PC) to develop criteria to assess the efficiency and competitiveness of the superannuation system. Secondly, we have tasked the Productivity Commission to develop alternative models for a formal competitive process for allocating default fund members to products."
The PC has been briefed to focus on whether the market is sufficiently open to innovation, new entrants and streamlining of costs; whether the system's resources are allocated effectively; services to members; and whether the system encourages optimal consumer behaviour (ie makes best use of what we know about behavioural finance).
The PC has been asked to pay special attention to competition structures in the superannuation industry, its regulation, the effect of government policy and relevant international experience.
Indicating how far reaching this inquiry could be, the PC has also been asked to examine alternative models for a formal competitive process for allocating default fund members following the implementation of MySuper.
David Whiteley, chief executive of Industry Super Australia (ISA) said, "Industry super funds support the current merit based system designed by the Productivity Commission in 2012, which provides a safety net for workers that do not choose their own fund."
"Super funds must be judged on the long term net returns delivered to members," he added.
Pauline Vamos, chief executive of the Association of Super funds of Australia (ASFA), said: "There is always room for improvement, but it's important to start by recognising what our system does well."
Factors such as the removal of barriers to the consolidation of legacy products, simplification of regulatory compliance and full implementation of SuperStream and MySuper should also be considered, she said.
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