COTA Australia welcomes the opportunity to respond to the proposed reforms to Australia’s superannuation system as outlined in the Your Future, Your Super package.
As the Productivity Commission has noted, Australia’s superannuation system has structural flaws with unintended multiple accounts, entrenched underperformers and inadequate competition, governance and regulation having a negative impact on many older Australians.
COTA Australia is generally supportive of the recommendations of the Productivity Commission report released in early 2019 and the general intentions behind the proposed Your Future, Your Super package. However, we have concerns about some important details in this package.
The proposed Australian Government Your Future, Your Super packages contains three broad elements. These are to amend legislation to:
- strengthen the requirements of the ‘best interests’ duty by superannuation trustees to become a ‘best financial interests’ duty with tighter controls
- ensure a single default account for employees who do not choose a superannuation fund when they start a new job
- require the Australian Prudential Regulation Authority (APRA) to conduct an annual performance test
As a matter of principle, COTA Australia strongly advocates for greater transparency of performance information about all superannuation products and funds to enable well informed consumer choices. This should be combined with improved measures to protect consumers from unnecessary costs and fees, poor behaviour, decisions and actions.
COTA Australia also urges the government to provide a timeframe for the implementation of reform regarding superannuation so that consumers and the industry can prepare for change.
Legislation must include a primary legislation timetable for the inclusion of:
- Administration fees
- Trustee directed products
- All other accumulation phase products
- All other retirement phase products