The Australian Institute of Superannuation Trustees believes carve-outs in superannuation reform designed to benefit the for-profit super sector are posing big problems for Australia's retirement system.
Latest research from the AIST and UTS corporate governance professor Thomas Clarke shows concessions in the reforms to Australia's superannuation system designed to benefit the for-profit super sector have led to Australian's in the "choice" super sector copping 117-182% more in fees than counterparts in profit-to-member funds.
According to the research, Australia's superannuation system has been interfered with by lobbyists to the point where the for-profit super sector is now the beneficiary of billions of dollars in free kicks. The AIST cites RiceWarner research that choice superannuation members stand to lose about $53 billion over the next 10 years, as compared against those invested in a median MySuper product.
The AIST fears the pressure on Australia's Age Pension costs will ramp up if choice super products continue to be allowed to play to different disclosure and reporting rules than MySuper products.
Commenting on the research, Clarke said the lobbying efforts of the for-profit sector had proven fruitful.
"The research points to an army of lobbyists - and the financial institutions that employ them - having been very successful in persuading governments to go light on regulation," Clarke said.
"This panoply of self-interested exemption has arisen over time, incrementally and without any ostensible rationale other than to benefit providers. The exemptions are systemic, on a vast scale, and have been occurring for decades."
AIST chief executive Eva Scheerlinck said the different rules amounted to the managers of more than $1 trillion in super savings not being held to account. Currently, eight million Australian's invest their super in choice products, and Scheerlinck called for the prudential regulator to publish comparative data so they could more easily compare options for investing their retirement savings.
"Constant erosions to the legislation and for-profit super providers being let off the hook has been at an enormous cost to consumers who are effectively left to fend for themselves," Scheerlinck said.
"All sorts of arguments have been put up by the retail super sector as to why these things shouldn't happen when what they really fear is losing the easy profits to be made from consumers being in high fee, opaque products.
"Due to the complex nature of super, a carve-out can sometimes seem like a minor amendment when in fact it can be worth billions of dollars in profit to a bank."