The efficiency and competitiveness of Australia's
superannuation system will be under the microscope following an
inquiry announced by the Federal Government.
Representing only the first stage of a more thorough review still
to come, the announcement represents the Government's
implementation of recommendation 10 of the Financial System Inquiry
on which we have
The Productivity Commission's terms of reference task it with undertaking
extensive public consultation to:
By November 2016: Develop criteria to assess
the efficiency of the superannuation system. The criteria
will then be used to assess the superannuation system ahead of the
full implementation of MySuper. This next inquiry will occur
after 1 July 2017.
In developing the criteria, the Commission is to have regard to
operational efficiency, allocative efficiency and dynamic
efficiency of the superannuation system. The Commission will also
consider the nature of competition in the superannuation industry,
and the effect of government policy on the competitiveness and
efficiency of the system.
By August 2017: Examine alternative models for
a formal competitive process for allocating default fund members to
products. This will include developing models that could be
implemented by Government if a new model for allocating default
fund members to products is desirable.
In developing alternative models, the Commission is to consider
international practice, costs and benefits of different mechanisms,
the robustness of the process, efficiency and innovation over the
long run, the effect on system stability and market concentration,
who should run the process, the extent to which the process
promotes the interests of consumers and regulatory impediments to
While perennial reviews and changes to Australia's
superannuation system are not new, the Government's
announcement and the findings of the Financial System Inquiry,
provides a powerful armoury for future legislative change.
Given 2016 is an election year, it remains to be seen whether
the timelines set out for the Productivity Commission can
realistically be achieved. If previous reforms are any
indication, this inquiry will have a long gestation period.
We will continue to keep abreast of these important developments
and update industry accordingly. If you would like our
assistance in making a submission to the Productivity
Commission's public inquiries, please contact a member of our
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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