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Costello well off the mark says ASFA
The Association of Superannuation Funds of Australia (ASFA) has accused former Liberal Federal Treasurer, Peter Costello of effectively seeking to nationalise the superannuation industry.
The ASFA chief executive, Dr Martin Fahy dismissed Costello’s suggestion that the private superannuation savings of Australians should be diverted to a government-run investment fund and administrator.
Fahy said there would be significant problems with the proposal put forward by Costello, who is now the chair of the Future Fund.
“What is being proposed is in essence the nationalisation of private, individual superannuation savings,” the ASFA CEO said. The Future Fund effectively operates as the Australian Government’s wholesale investment manager. However, it lacks the required governance framework and administrative capabilities needed for it to operate in a superannuation context.”
“Broadening the role of the Future Fund – from managing money to meet public liabilities to also managing private superannuation assets – would represent an erosion of the trustee and investment governance frameworks critical to the delivery of member returns,” Fahy said.
It would also increase political risk for the Future Fund and the government, and risk heightening market or member perceptions that savings are underwritten by the government.
“Given its purpose, the Future Fund does not offer vital group insurance coverage that protects Australians in times of personal crisis, nor does it have the capability to do so,” he said.
“Mr Costello’s proposal would also require the government to set up and operate a centralised facility to undertake administration functions for the government-run fund. Effectively, this would see administration services for many member accounts transferred from private sector operators to a government administrator.”
“Australia’s private superannuation administrators have a long track record of generating efficiency improvements and providing prudent, reliable services to members,” Fahy said. “Entrusting administration to a government-run entity would reverse significant efficiency gains delivered through the government’s SuperStream program, which sets very high standards for private administrators.”
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