MySuper fails to competently address key areas scoped out by the Cooper Review, according to the Association of Financial Advisers (AFA), and ultimately short-changes all Australians.
"The Cooper Review looked into the governance, efficiency,structure and operation of Australia's superannuation and provided recommendations to improve superannuation outcomes for consumers," said AFA President, Brad Fox. "We believe the solution presented by the Government in the form of MySuper fails many of these fundamental objectives."
Mr Fox said that the creation of MySuper default funds will actually encourage Australians to ignore their superannuation.
"We are sure this is not the Government's intention - however, we believe MySuper will lead consumers to assume that the Government is ‘looking after' their superannuation and they no longer need to worry about it themselves," Mr Fox said. "This could be a recipe for disaster resulting in many people being even less prepared for retirement than they are now."
Mr Fox also argued that while the Cooper Review resolved to look at ways to promote effective competition in the superannuation system, MySuper only reinforced the current anti-competitive structure of the industry, which unfairly favours default workplace superannuation arrangements.
"Yet again we see one rule for one segment of the industry and another for all others," Mr Fox said. "The fees and charges associated with intra-fund financial advice, for example, are hidden from consumers under MySuper because the Government has not seen fit to force industry funds or MySuper default funds to disclose the fees charged to every single member for the provision of so-called ‘free' intra-fund financial advice. It has also introduced an ‘opt-out' rather than an ‘opt-in' provision in relation to the enforced consolidation of super accounts under $1,000 and later under $10,000, while ruthlessly legislating to enforce opt-in on adviser businesses. It's anti-competitive and undemocratic."
In relation to operation, Mr Fox said the Cooper Review indicated super account holders should not be negatively impacted by conflicts of interest. "Nothing we have seen in the MySuper proposals convinces us that this issue has been competently addressed," he said.
In relation to governance, Mr Fox said the Government had made no attempt to act on the Cooper Review proposal to improve corporate governance. "With $1.3 billion of Australians' super at stake, we believe independent directors on superannuation boards are a necessity. The current arrangements are a joke with unqualified, inexperienced people sitting as trustees on super fund boards."
Mr Fox argued the process which led to the creation of MySuper was flawed from the start. "This is because the Cooper Review panel did not include a representative from an adviser association," he said. "Advisers meet with ordinary people to discuss their financial future every day of the working week and as such have a more intimate understanding of their superannuation needs than the Government or any other segment of the industry. In failing to consult with adviser associations, the Government has ultimately failed all Australians. Good advice transforms people's lives, MySuper will not."
The Association of Financial Advisers: AFA
The Association of Financial Advisers (AFA) is the longest running professional financial adviser organisation in Australia and its members have been providing trusted advice to consumers for 65 years. The AFA celebrates its diamond anniversary this year. Through individual memberships and relationships with licensees, the AFA represents over 7,000 members. These members offer a broad range of financial advice services to ordinary Australians with many having specific expertise in risk protection. The AFA aims to provide a robust united voice for all financial advisers and their clients, continually improve practices and to focus firmly on the exciting, dynamic future of the financial advice profession. With six and a half decades’ success, the Association's ongoing relevance is due to its philosophy of providing leadership and direction to advisers and their clients. It is an association run by advisers for advisers - this means advisers set the agenda, decide which issues to tackle and shape the organisation's strategic plan.
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Julie Bennett, 64 Media
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