Consumer groups, unions, industry super funds and company directors are united in their concerns about the Government’s proposed superannuation changes aimed at increasing transparency and strengthening the powers of the Australian Prudential Regulation Authority (APRA).
Public hearings into the proposed legislative changes were held in Sydney on Tuesday and most of the submissions criticised the amount of time that the groups concerned were given to scrutinise the incredibly complex changes.
The most contentious changes centre around the introduction of independent directors and increased APRA powers.
Consumer group CHOICE gave the changes a mixed review. Its submission supported moves to help consumers better manage their accounts and the closing of the salary sacrifice loophole, which has seen unscrupulous employers strip away retirement savings. But it was critical of the reform to introduce independent directors onto the boards of industry super funds.
“We agree there are sound principles behind the reform to introduce independent directors, however we see the need for refinement,” the CHOICE submission stated. “The Bill has the potential to destroy the unique value and culture brought by member directors.
“Our review of the available evidence suggests that member directors, where appropriately selected, can contribute to good governance, so a role for them should be retained.”
CHOICE was also concerned the increased APRA powers were not supported by appropriate guidance on how the powers would be used.
Industry Super Australia was highly critical of the proposed reforms, claiming they heavily favoured retail funds.
The Australian Institute of Superannuation Trustees (AIST) recommended that the Senate reject a push by the Government to mandate a governance model for superannuation funds, noting that no evidence has been presented showing that the current system is failing members or that the proposed model would improve member outcomes.
“The removal of the equal representation model from the legislation will remove the guaranteed voice of the members and of the employers, which currently ensures a balance in decision-making and a true understanding of the membership,” said AIST CEO Eva Scheerlinck.
The Australian Council of Trade Unions (ACTU) was also critical of the proposed changes, claiming that some of the exemptions given to pooled superannuation trusts actually work against increased transparency.
The ACTU says “there is no consistent case, alleged or proven, to say that there are any systemic issues with the operation of the superannuation system which merit a round of legislative change such as is being proposed and that no case has been made to say such problems exist.”
The Association of Superannuation Funds of Australia (ASFA) was critical of the time given to prepare its submission and was not convinced of the need for change.
“ASFA’s view is that the regulatory burden for superannuation fund trustees is already heavy and that any addition to that burden, such as the measures proposed in the Bills, should be made only where it is absolutely necessary,” its submission read.
“We are not convinced that all of the proposed measures are absolutely necessary for APRA to perform its functions or that the additional cost of implementing the new measures is outweighed by the benefits.”
The Australian Institute of Company Directors (AICD) was worried about the potential unintended consequences that could result from rushing through the legislation, while also questioning the new APRA powers.
“The powers granted to APRA under the Bill are too broad and go beyond that which is required to achieve the government’s policy objective,” the AICD statement explains.
The Financial Services Council (FSC), which represents retail and wholesale superannuation funds, was one of the few submissions that fully supported the changes, with few amendments.
What do you think about the proposed super chances? Are you concerned about what it may mean for your returns?