In its recent submission to the Productivity Commission, the FSC has called for the removal of barriers to competition in the default superannuation market as well as a shift away from the “industrial system” that is failing consumers.
“The current industrial system was not designed with a view towards competition and market design,” the FSC said in its submission.
According the FSC, the highly protectionist overlay on the superannuation system acts to limit competition and stifle innovation, and has resulted in the proliferation of sub-scale and inefficient superannuation funds as well as discouraging consumer engagement.
The FSC’s submission raised concerns regarding sub-optimal outcomes for consumers as a result of the current ‘industrial’ superannuation system.
The FSC also rejected the implementation of an auction model, and called for more market-based competition with consumer protections.
“Important reforms, such as enabling all Australians to have the freedom to choose their own superannuation fund, allowing comparable MySuper products to compete on a level playing field in the default market, and requiring trustees to appoint independent directors, in part to facilitate industry consolidation, have failed to be implemented by successive governments,” the FSC said.
FSC chief executive Sally Loane said, “It’s time we moved out of the out-dated industrial age and created a modern, technology-led system that can make superannuation as strong, flexible and competitive as it can be, well into the next century."
The submission praised the Productivity Commission’s ‘no default’ baseline - where consumers must choose a super fund product and provide it to an employer in order to receive contributions.
“By starting the debate from a no default baseline, the Productivity Commission has created a welcome opportunity to transform the current old-fashioned model based on yesterday’s industrial relations laws into a consumer-driven contemporary system that promotes a level playing field for all,” Ms Loane said.
“We need a new, modernised, competitive and market-based superannuation system which is fit for the next generation.”
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