Australia’s superannuation system is held in extremely high regard around the world and the Thinking Ahead Institute is deeply interested in whether the proposed Your Future, Your Super reforms will further strengthen it for the benefit the super fund member, or weaken it. The reform’s intentions are unquestionably good, however we believe that, in three important areas, they will be counterproductive and will make member outcomes worse. In our view, member outcomes will suffer because aggregate costs will rise, long-term achieved returns will be lower and systemic risk is likely to increase.
The rationale for these conclusions is contained in our submission to the government’s Your Future, Your Super consultation, written after interviewing senior investment professionals from different super funds. This submission also lists the subsidiary effects we expect, several of which may not be compatible with government desires. We also comment on these reforms in the light of global best practice in DC, and finish by suggesting alternative actions which range from the admittedly impractical to the highly-practical and relatively simple.