EDITORIAL

Whose best interests?

I don’t always agree with Liberal Senator Andrew Bragg, but his observation during this week’s Senate hearing that forcing representative bodies to merge would be a good way to reduce costs to super funds and members was a good one.

I’ve written before that most industry associations are conflicted because they promote their members’ interests (i.e. super funds) rather than the best interests of consumers (sometimes these interests coincide, but not always). The independence is lacking and the cost to consumers is large.

This is one of the reasons I started the Conexus Institute which, for the record, is an independent group funded through my own philanthropic interests with the primary objective of producing independent research to improve the retirement system.

I have publicly stated that pausing the superannuation guarantee rate is the right thing to do while the industry remains inefficient in delivering retirement outcomes (as called out in the Retirement Income Review). I have not seen lobbyists or representative associations display this kind of introspection.   

Bragg specifically called out the Australian Institute of Superannuation Trustees, Industry Super Australia (ISA), the Financial Services Council (which he used to work for) and the Association of Superannuation Funds Australia.

These groups help their member organisations navigate a complex system. Some have championed important causes (like ISA with commissions). However, I believe that there is now a positive opportunity to reduce industry cost and re-set tense relationships with Government.

This week I watched my colleague David Bell, executive director of The Conexus Institute, present as a witness to the Senate hearing on the proposed Your Future, Your Super (YFYS) reforms. This controversial legislation, well-intended yet flawed in design, will dramatically alter the superannuation landscape as we know it.

Our research on YFYS is thorough and has all been made open source. Thanks to members of the industry working group from Frontier, JANA, Mercer, Rice Warner, and Willis Towers Watson for their assistance.

The Conexus Institute doesn’t plan to do much more work on YFYS unless requested, but we are always ready to assist. If the reforms go through as they are, funds should work through our case study which explores what a stable investment strategy will look like.

There are many other areas where the research-for-impact model of The Conexus Institute can be valuable. Growth / defensive classification needs further work, the journey to retirement solutions is nearing its final innings, while the respective roles of guidance and advice need to be resolved.  

I can only hope the associations that remain in our industry do so for the right reasons and contribute in a cost-effective manner to the discussion on these issues with an integrity that befits their members and the broader community.

Colin Tate, founding chair, The Conexus Institute