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Is superannuation too big to let politicians play with it?
As the Australian superannuation industry moves to assets of over $3 trillion it is time to extract politics from the equation and place the sector in the hands of an independent entity such as the Reserve Bank of Australia (RBA).
That was one of the issues canvassed in a superannuation focus group conducted by Super Review with NESS Super chief executive, Paul Cahill, actively arguing for the fate of superannuation to be removed from the hands of politicians and into those of a less volatile authority.
“I think it is time that the whole superannuation debate is moved to a different level and what I’d love to see is the Reserve Bank get carriage of superannuation,” he said.
“Because of its political nature now, and the size of it – $3 trillion going to $8 trillion – it’s too dangerous to leave it to fly by night politicians with an agenda and I include Labor and Liberal in that description,” Cahill said.
“You can see the damage that it can do when it is treated in an incorrect manner,” he said.
“It [superannuation] needs to be treated like interest rates or currency and needs to handled by an independent authority such as the Reserve Bank. The Government may put people on the board of the RBA but it is highly independent.
“Due to the critical place that superannuation intersects with the economy now, I think it’s time it gets moved off to something like the RBA for carriage of the various legislative requirements,” Cahill said.
Deloitte superannuation partner, Russell Mason, said the concept being canvassed by Cahill was not one he had previously contemplated but that he agreed that “as we approach $3 trillion in assets, superannuation is something that is just too large and too important to get wrong”.
“So whether it’s the RBA or consolidated with a specialist superannuation regulator which brings the best of the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission (ASIC) and the Australian Taxation Office (ATO) together we need to make sure this money is well-regulated.”
He said that Deloitte had estimated that by the end of the 2030s, superannuation funds would own over 60% of the assets listed on the Australian Securities Exchange (ASX) which represented a huge amount of money with the capacity to change the shape of corporate Australia.
“All that means superannuation will need to be well managed and well-regulated and, as Paul Cahill said, from an independent point of view,” Mason said.
TAL chief commercial officer, Andrew Crawford said he believed it was about confidence and the need for fund members to hear different voices talking about confidence in the superannuation system and confidence in the role insurance plays in superannuation.
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Yes, we cannot let the fund members make any decisions about their future retirement benefits (via Parliamentary Democracy). Perhaps a good start would be to finally introduce Annual General Meetings for industry fund members, given the industry fund lobbyists are so good at turning up at retail fund AGMs. Wouldn't that be a novel idea?