Stronger Super: FPA resolves to support Australian super fund members
The FPA particularly welcomes the clarification of timelines including the commencement and implementation of certain MySuper measures. “Irrespective of our position on MySuper the FPA is pleased that industry is been granted adequate time to transition,” said FPA CEO Mark Rantall.
“The FPA is very pleased with Super Stream and believe this will deliver not only savings and efficiency but help to effectively ‘future proof’ the superannuation system.
“However we need to remember that the original remit of the Cooper Review was to ensure that Australia’s superannuation system was operating in the most efficient manner and in the best interests of fund members.
“The latest MySuper reforms may not necessarily meet those lofty standards.”
Mr Rantall said while the FPA acknowledges the revised MySuper rules mark an improvement on the original proposals – especially in dealing with unnecessary costs and boosting efficiency – it remains unconvinced about certain key aspects, including:
- MySuper may allow superannuation funds to charge indiscriminately and invisibly for their intra-fund advice. The FPA believes any fees for intra-fund advice must be transparent to fund members;
- Existing corporate superannuation schemes that already meet the low-cost and efficiency standards MySuper is supposed to achieve will be unfairly forced to close;
- Compulsory consolidation of superannuation accounts under $1,000 will be on an ‘opt-out’ requirement rather than an ‘opt-in’ – which is being required in the financial advice space. This is particularly concerning in respect to insurance cover being cancelled without member consent. This would be further exacerbated if the proposal to increase this measure to apply to accounts under $10,000 from 2014 goes ahead.
“We are concerned that MySuper will deliver a false sense of security to many ordinary Australians. It is obvious that MySuper, with a potential benefit of $40,000 at retirement, will not meet the retirement income needs of the majority of Australians,” Mr Rantall said.
“Retirement income adequacy is the real issue in superannuation, which MySuper fails to address and could, in fact, damage.”
Whilst acknowledging that the proposed increase in the Super Guarantee from 9% to 12% will go some way to improving retirement income adequacy, Mr Rantall said professional financial advice and education will make an enduring difference.
“It would be unfortunate if MySuper causes consumers to lose interest in seeking help to manage their retirement savings. Professional financial advice is critical to producing better superannuation outcomes,” Mr Rantall said.
“To this end we are very pleased that fund choice has not been restricted and remains a legitimate option for those Australians who are engaged and want to take control of their financial future”.
Mr Rantall said the FPA was pleased to see changes announced for SMSFs especially rules governing auditor independence and registration.
“The FPA looks forward to seeing the detail along with the replacement to the accountant’s exemption as part of FOFA tranche II. SMSFs deserve to be serviced by highly competent, experienced and qualified professionals – which include Financial Planners, Accountants and Auditors. These changes will bring greater confidence to the SMSF sector”, he said.