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Retirement Income Review consultation for AIST member funds
Improving the integration of the age pension with superannuation and smoothing the process of transitioning to retirement will be a key focus of the Retirement Income Review.
In consultation this week with AIST and representatives from our member funds, Retirement Income Review Panel member, Professor Deborah Ralston encouraged funds to focus on providing evidence in their submissions, adding that cameo data on superannuation and retirement outcomes for different cohorts would be valuable for the Panel to consider.
Ms Ralston also indicated that the Panel would be examining involuntary retirement experiences as well as data on retirement outcomes from Indigenous Australians.
AIST’s submission will have framed around the three themes of fairness, adequacy and member protection.
To provide feedback to AIST on the Retirement Income Review, please contact AIST senior manager, policy, David Haynes at firstname.lastname@example.org
Choice products must be not be given a free pass: AIST
AIST has this week re-emphasised the importance of holding Choice products to the same standards as MySuper products.
In an interview with the Australian Financial Review, AIST CEO Eva Scheerlinck said retail providers of Choice products who charged high fees while delivering poor returns should not be given a free pass.
Ms Scheerlinck was responding to comments by University of NSW academic Scott Donald, who suggested APRA should abandon plans to assess the full range of 40,000 or so super products available on the market.
APRA has already produced a colour-coded heatmap to appraise the performance of MySuper products.
Ms Scheerlinck noted that the members’ best interests duty applied to all types of products, not just MySuper, and reporting and transparency were key for comparability and fairness.
"A lot of people have been transferred out of MySuper into these underperforming choice products to their detriment," she said.
Responding to concerns the data task was simply too onerous, Ms Scheerlinck said given that ratings agencies already looked at choice products there should be no problem in the same information being supplied to APRA.
"Any fund that can’t provide data on the performance of their products to the industry regulator shouldn’t be operating and offering this product to consumers," she said.
"Moreover, the inability of product providers to provide data on fees and performance raises the question as to how the trustee monitors member outcomes and satisfies its fiduciary duty."
Consumer advocacy body must be truly independent: AIST
AIST has urged Treasury to ensure the proposed Consumer Advocacy Body for Superannuation is truly independent and represents all consumers, including vulnerable Australians.
The consultation conducted by Treasury is the first step in the process to implement Recommendation 28 of the Productivity Commission's Superannuation: Assessing Efficiency and Competitiveness report, for an independent, adequately‑resourced superannuation members' advocacy body.
AIST’s submission supports measures which improve members’ ability to navigate the superannuation system and provide additional member input into policy discussions.
Our submission notes the that the profit-to-member business model returns profit to members only and always put the best interests of members first.
We also point to a potential overlap in the work of ASIC and AFCA and the consequent need for clarity of the role of the consumer advocacy body, given that AFCA and ASIC both have established Consumer Advisory Panels.
For further information please contact AIST’s Policy Analyst, Zach Tung at email@example.com
ASIC points to poor returns from low balance SMSFs
ASIC has provided data showing that self-managed super funds with a balance below $200,000 typically provide a negative return on investment.
During hearings held in October, the House of Representatives Standing Committee on Economics asked ASIC commissioner Danielle Press about the average returns of low-balance SMSFs.
ASIC took this question on notice and this week provided a response to the Committee. Citing ATO data, ASIC indicated that for the period 2016-17 (and the preceding two financial years), SMSFs with a balance of less than $200,000 on average had a negative return when compared to SMSFs with a balance of more than $200,000.
For the 2016-17 year (the most recent data available), SMSFs with a balance between $100,000 and $200,000 on average had a return of negative 0.48 percent.
In comparison, balances between $200,000 and $500,000 returned 4.65 percent.