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Stronger Super or a work in progress?
There is much to recommend the core contents of the Government's Stronger Super policy initiative, but it falls far short of delivering the certainty many superannuation fund members have been seeking.
The Federal Government last month finally delivered the final iteration of its Stronger Super policy proposal, but it did not succeed in delivering the certainty craved by so many of the Australians relying on superannuation to provide the underpinning of a comfortable retirement.
It is a measure of Stronger Super as a policy that none of the major stakeholders have sufficiently embraced its contents such that they have stopped their bickering or called a halt to their political lobbying.
It was obvious even before Assistant Treasurer Bill Shorten had pre-briefed the key stakeholders on the ultimate shape of his Stronger Super pronouncements that for them, the devil would be in the detail of the legislation and then its ultimate regulatory delivery.
For this reason, the only certainty to emerge from Stronger Super is the uncertainty that has been borne of how quickly the legislation actually moves through the House of Representatives and Senate, and is then rolled out into the industry.
The reality for members of superannuation funds and self-managed superannuation fund trustees is that they are looking at implementation dates extending over three years, with the only certainty being that a federal election will intervene.
And if the implementation timetable of Stronger Super is not of itself an issue, then there exists the Government's promise to refer the vexed issue of default funds under modern awards to the Productivity Commission.
The degree to which Shorten's Stronger Super announcement in mid-September did not represent the last word on the final shape of superannuation policy and legislation was evidenced by the degree to which stakeholders signalled their intention to keep lobbying around the detail.
For its part, the Industry Super Network indicated it was less than happy with key elements of the package, saying it would be encouraging the Government and regulators to remove the proposed $10,000 threshold for the consolidation of account balances when it is due to increase in 2014.
As well, it said the Government needed to determine the final policy parameters for multi-pricing arrangements and to address employees' savings being flipped into more expensive products.
Irrespective of the approaches being pursued by the major stakeholders, there is much in the Stronger Super policy which deserves to be implemented and to carry bipartisan support when the legislation is ultimately debated in the Parliament.
Foremost among the policy positives is SuperStream - something that has already earned the backing of almost all the major players, including the Opposition spokesman on Financial Services, Senator Mathias Cormann.
The provision of more definitive superannuation performance data by the Australian Prudential Regulation Authority has also earned the support of a cross-section of the industry, notwithstanding the regulator's less than stellar performance to meet a similar request from the Government more than two years ago.
However, MySuper is less certain of bipartisan support in the House of Representatives in circumstances where the Opposition has persistently referred to the Government's failure to refer default funds under modern awards to the Productivity Commission.
The Opposition has indicated it believes considerable inconsistency exists with respect to MySuper being implemented in the absence of the Productivity Commission addressing a perceived industry fund monopoly in relation to default funds under modern awards.
As well, Cormann has signalled that the Coalition may yet try to impose amendments on the underlying Stronger Super legislation to impose stronger corporate governance requirements on superannuation funds, particularly with respect to the holding of multiple trustee-directorships.
As the roundtable published in this edition of Super Review has underlined, there exists a growing body of support for superannuation fund trustee boards to be held to the same standards of corporate governance as the boards of publicly-listed companies.
Further, a majority of the roundtable participants agreed with the contention that superannuation fund members should be granted the right to vote on major issues such as fund amalgamations, and possibly the election of trustee boards.
It is clear that whatever elements of Stronger Super make their way through the current Parliament, they will not encompass the questions of fund governance raised by the Cooper Review and embraced by the Opposition.
There will be those who argue that the Coalition's support for a higher standard of corporate governance is owed to its belief that some significant personalities within the industry fund movement hold multiple directorships on trustee boards.
However, if the superannuation guarantee is to be lifted to 12 per cent, it is incumbent on the Government to impose a commensurate increase in standards of governance.
AUTHOR
Mike Taylor
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