ASFA, ISA, FSC weigh in on the final report

Major industry associations collectively agree that the Productivity Commission's final report reaffirms the strength of superannuation, but member advocates say the findings are wake up call to fix a broken system.

CHOICE chief executive Alan Kirkland said the final report is a call for all political parties to fix an "outdated" system.

The fact that up to $3.9 billion in 2019 is being "leeched out" of people's retirement savings every year is "outrageous," he said.

"Even more worrying is that industry continues to lobby against sensible consumer protections, such as the Protecting Your Super Package currently before parliament, which would address these problems."

Federal Treasurer Stuart Robert said there are significant issues that need to be addressed.

"The Government will carefully consider the recommendations and will await The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry's Final Report before finalising our response to the Productivity Commission's report," he said.

ASFA chief executive Martin Fahy said it was disappointed with the Productivity Commission doubling down on the best-in-show list as a mechanism for allocating default super.

"This approach risks creating an oligopoly in default superannuation and reducing long-term competition."

The report confirms the overall strength and relevance of the Australian superannuation system, including the importance of compulsory contributions and universal coverage of employees, he said.

The Financial Services Council was also concerned about the best-in-show list and its potential unintended consequences.

FSC chief executive Sally Loane said the list could create a "monolithic concentration of funds, stifle competition and create huge barriers for innovative new products."

"However, we strongly support raising the bar for MySuper products to ensure individuals are not defaulted into poorly performing funds. True competition requires high-performing funds of all shapes and sizes, and we should not create barriers to entry for start-ups and other tech innovators," Loane added.

Industry Super Australia chief executive Bernie Dean said the Productivity Commission's consumer safeguards were inadequate and ignored big opportunities to boost member accounts.

"In essence the Productivity Commission is abandoning the proven, low-cost industrial default system in favour of a choice-first architecture that has been ground zero for consumer harm.

"A workplace default framework is a necessary counterweight to finance sector sales tactics," Dean said.

Read more: Productivity CommissionSuperannuationASFAFSCISAAlan KirklandBernie DeanFinancial Services CouncilIndustry Super AustraliaMartin FahyMySuperRoyal CommissionSally LoanStuart Robert
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