Progress on Royal Commission welcome, but super priorities must not be forgotten

| August 19, 2019

Industry Super Australia (ISA) has welcomed the Morrison Government’s commitment to implementing the recommendations of the Hayne Royal Commission.

ISA Chief Executive Bernie Dean said the Government’s implementation roadmap set out an ambitious legislative timetable that should deliver important protections for consumers, including the requirement that ongoing fee arrangements must be renewed annually, introduction of a new disciplinary system for financial advisers, and bans on hawking of super products.

“The Royal Commission did a very good job of identifying where the problems and misconduct were – now the Government must get on and fix them.

“While this important work is underway, we urge the Government not to lose sight of the other challenges such as chronic underperformance and the fact that one in three workers are not even getting paid super.”

ISA is a strong advocate for legislative reform that is in the best interest of members and whilst quick implementation is to be commended, it should not compromise the interests of members.

While the recommendation relating to stapling will be dealt with as part of the Government’s response to the Productivity Commission, ISA will continue to work with Government as they determine their response to this important recommendation.

Industry super funds preferred model is to automatically combine a workers’ super each time they change jobs into a single quality checked account.

As independent cost-benefit analysis of ISA’s model by KPMG found it would deliver up to $416 billion in performance dividends to members and eliminate multiple accounts, with consumers standing to benefit from close to $200,000 more in super over their working life.

This is in comparison to the ‘fund-for-life’ model which could see workers stuck in a single underperforming fund for life.

Separately, ISA is urging the Government not to lose sight of the other key reform priorities in the superannuation sector.

Both the Royal Commission and Productivity Commission made it clear that underperformance is the single most costly drag on the system, costing consumers hundreds of thousands of dollars in retirement savings.

Dealing with this chronic underperformance must remain the Government’s top priority when it comes to superannuation, along with the elimination of multiple accounts and stopping the scourge of unpaid super.