While AustralianSuper chief executive Ian Silk welcomed the objectives of the reforms, saying they were “wholly supported by AustralianSuper”, he believes more detail is needed and punishments should be steeper.
“Much of the detail remains to be revealed in the legislation and in regulations, but from what we have observed through the budget night announcements, there are a number of areas that we would propose to the government – and we’ll seek to do that when the bills are available – to improve the likelihood of those objectives being met,” Mr Silk told the standing committee on economics on Friday.
“This is not a mealy-mouthed ‘agree in principle’ … we’re looking to raise the bar, not weaken it.”
Mr Silk believes the reforms should apply to all superannuation funds and options, and questioned why they only measured investment fees, calling the decision to exclude administration fees “an oversight”.
“The government has quite rightly said ‘people are interested in what lands in their account’, and what lands in their account is a function of contributions and investment returns, less investment fees and less admin fees,” Mr Silk said.
“The government’s proposal seems to take out admin fees from the calculation. We say that, self-evidently, it should include all fees, so that’s a really critical change we think should apply.”
Mr Silk also wants the government to beef up penalties for underperformance, saying the current penalties put the responsibility on members to take action to protect their super while doing nothing to help those currently stranded in a dud fund.
“The onus should be on regulators to get rid of the poor-performing funds,” Mr Silk said.
“There should be a much stronger, more punitive approach taken to poor-performing funds rather than relying on individuals to respond.”
Agree with Silk, however first let’s tidy up those messy little issues by union funds like false labelling investment options and misallocations of assets per risk profiles, inaccurate and irregular valuations of unlisted assets, and how about publicly available forensic audit insight into a super fund’s cashflows and fees paid to related parties, all which give false comparisons between funds – then see if he still wants steeper harder control by a regulator around this area.
I hope they also measure whether superfunds pass on the tax refund for things like insurance premiums or advice fees. I would suggest that any super fund keeping these is operating outside of the spirit of the law.
The funny thing is that industry funds don’t report net of their admin fees. Aus Super has an account keeping fee of $117 that is not netted out of their returns. Given the average balance of their members across the board is about $45k that is a material amount.
Isn’t this the bloke who was calling for the RBA bailout at the start of the year
Yes
Government should also be given powers to intervene when the asset allocation does not meet the definitions prescribed and a fund holds 93% growth assets in a balanced fund.
The biggest threat to an investors wealth is the State (i.e. Government) followed very closely by their own behaviour. Everything else is so insignificant to the result that it hardly matters. Counter cultural and true. An adviser can add 600 bps to performance simply by keeping the investors behaviour in check. Not much we can do about stupid legislation trying to strip current or future wealth from investors.