Richard Watts discusses the implications of the Productivity Commission’s recommendations to change the default super arrangement.
There’s been some big shake ups in the world of super in the past six months. And one of the biggest is the Productivity Commission’s call to change the way workers are channelled into default super funds. At the moment, the default fund is most often an industry fund but the recommendations pave the way to give retail funds a bigger slice of the $7 billion a year super pie.
Instead of the current system where unions and employers choose the default fund, the PC recommends that Fair Work Australia or another independent body choose who qualifies to be a default fund.
Richard Watts, from Industry Super Network, tells 3Q that he is receptive to a merit based system if it means retail funds meet the same governance arrangements and produce returns equal to the industry funds.
Matt Linden believes the Government’s latest changes will make super simpler, accessible and more relevant for those who’ve taken their eye off the ball.
How much do you know about your super fund? Who is responsible for looking after your savings? Where and how is your money invested? Who runs the fund?
If you don’t know the answer to many of these questions, you’re not alone. While super is now the biggest asset after the family home, few take an active interest in how it is managed. Because super is compulsory and locked away until retirement, most of us assume it will be there when we need it and focus our financial attention on the here and now.
But Industry Super Network’s Matt Linden tells 3Q the Government’s new measures will make it easier for members to access and understand information about their account.
Matthew Linden warns people with self managed super to do their homework because — unlike members of retail and industry funds — they have no safety net.
With almost $200 million lost after the collapse of fraudulent investment house Trio Capital, questions continue to be asked about many aspects of Australia’s biggest super fund scandal. One such question is the lack of compensation for fraud for self managed superannuation funds.
Trio Capital was a sophisticated fraud which roped in clients with the promise of low risk investment for high returns. About 6000 people signed up to invest only to have it wiped out six years later.
Matthew Linden, chief policy adviser for Industry Super Network, believes there were warning signs with Trio which went unheeded. He tells 3Q that financial advisers, acting on large commissions, failed to investigate the fund before recommending the investment. With the introduction of new legislation starting this July which prevents future commissions to financial advisers, he believes the incentives which have driven poor quality advice will be largely prohibited.
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In this week's report:
- Performance of Scott Morrison
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- Preferred Prime Minister
- Top Federal Government priorities for 2021
- Uptake of a Covid-19 vaccine
- Perceptions of change in the standard of living for Aboriginal and Torres Strait Islander peoples
- Changing views towards Australia Day
- Support towards a separate national day