Superannuation industry leaders warn that the government risks undermining confidence in the system with constant regulatory changes and reviews.
“Superannuation funds are increasingly worried by the amount of red tape they have to deal with,” Michael Easson, the chairman of the Association of Superannuation Funds of Australia, told The Australian.
“There has to be appropriate regulation to make sure that proper standards are applied to the industry,” he said speaking ahead of the ASFA national conference in Sydney today. “But concerns about regulatory intervention are a worry.
“Part of our role (at ASFA) is to make sure that the police on the beat are focused on what matters and not quenching the drive of (super) institutions to be dynamic and innovative.”
He said the regulatory burden on superannuation in Australia was “becoming more and more mountainous”.
Dr Easson said there was “bewilderment” in the industry about why there has been criticism of the effectiveness of the super system “when members are indicating that it is not the sentiment they are holding”.
He said the industry had the potential to be more involved in helping the economy, including providing long-term debt funding and investing in infrastructure.
“But the more you are tied up in red tape, the less scope there is to attend to the more creative aspects of a dynamic economy.”
He said some of the regulatory changes in recent years had “disrupted confidence”.
The Australian super system is one of the best in the world but there is a danger that public criticism that it is not working and increasing calls for regulatory reviews will erode confidence.
“We have a really good system that needs to be improved, rather than a broken system that needs to be massively repaired,” he said.
Dr Easson was speaking as it becomes more likely that calls for an inquiry or royal commission into the banking industry are being expanded to include the super sector.
“What worries me the most is the amount of paperwork which stops CEOs and the leadership of organisations from thinking about new ideas,” he said.
The super industry has faced a raft of regulatory changes since the Rudd-Gillard-Rudd governments.
The Productivity Commission is looking into the efficiency of the system and the federal government is looking at five different pieces of new legislation affecting the industry.
ASFA chief executive Martin Fahy said the system was one of the most respected in the world and people overseas came to Australia to learn from the industry.
“It is difficult to reconcile how the second or third most highly ranked superannuation system in the world, which has delivered enormous benefits, and a similarly strong banking system, has attracted the ire and the criticism it has, given how well it has performed over the last couple of years,” he said.
Dr Fahy said increasing regulation was forcing the industry to become more “passive” in its investment strategy. He said the compulsory super system meant the level of government support for retirees as a percentage of GDP was substantially less than in other OECD countries.
By Glenda Korporaal
29 November 2017