‘Common sense’ policies to win the day: Hume

Addressing the SMSF Association National Conference 2021 on Tuesday, Ms Hume said the government wanted more consumers “to take an active interest in their retirement savings”, with reforms to the sector aiming to make fund comparisons easier through establishing what the minister called “an objective performance test”.

“The early access to super scheme demonstrated a welcome indication that Australians are becoming more engaged with super and retirement planning,” Ms Hume said. 

“We have a system we can be proud of but it’s not perfect - the government will continue to take a common sense approach to policy with the best outcomes for fund members front of mind at all times.”

Ms Hume said with Australia’s super investment pool now the fourth largest in the world at almost $3 trillion - larger than the market cap of the ASX and Australia’s GDP - it was essential member funds were being used appropriately at all times.

“Our compulsory super system should allow people to be as engaged as they wish, and the government’s role is to get the policy settings right,” she said.

Following recent criticism from Liberal backbenchers around alleged misuse of member funds by the industry super sector, Ms Hume said the Your Future, Your Super reforms would tighten accountability for funds around their fiduciary responsibilities to members.

“The best interest duty will be amended to be the best financial interest duty, to remove any doubt about how trustees will use member money,” she said. 

“This will ensure trustees are more accountable for their decisions and focus on financial outcomes.”

The comments came as the reforms were introduced to parliament by Treasurer Josh Frydenberg on Wednesday, with debate around the government’s legislation expected to continue in the House of Representatives on Thursday.

Mr Frydenberg said the reforms represented “the next step in modernising and improving the super system to ensure it is working harder”.

Despite a period of industry consultation earlier in the year, the bill was introduced to the House unamended, prompting criticism from the industry fund sector for the government’s refusal to make “sensible changes” around the specifics of its benchmarking system.

“The government’s proposed performance benchmark tests need strengthening and expanding. They must include all fees charged – the government has excluded administration fees from the test, which are far higher in the retail sector and how those funds generate profits for shareholders,” Industry Super Australia said.

“About 80 per cent of the choice sector will likely be shielded from the performance benchmark tests, despite the Productivity Commission finding this is where most of the dud funds are found. There is also no timeframe to test almost 70 per cent of for-profit funds – that is 6.7 million-member accounts holding $427 billion in assets.”