Both the FPA and the AFA have issued statements calling for greater consumer engagement following the Government’s confirmation that it will implement the Cooper Review’s MySuper reform proposals.
While the FPA welcomes the creation of efficiencies and reducing costs in Superannuation, it warns that ‘… greater consumer engagement and access to professional advice are vital in ensuring the adequacy of Australians’ retirement income streams.’
FPA CEO, Mark Rantall said the retirement savings of most Australians were inadequate and professional financial advice and the creation of a savings culture was critical to the future of the Australian Superannuation system:
“MySuper and SuperStream will only go so far in addressing adequacy of retirement income…
“MySuper and SuperStream will only go so far in addressing adequacy of retirement income and reducing the burden on an ageing population. Professional financial advice should play a bigger role,” said Mr Rantall.
“We are concerned that Australians may be provided with a false sense of security. The proposed additional $150,000 of superannuation savings announced by Government will still not be adequate to retire on when the average superannuation balance is only $70,000,” he added.
“We urge the Government to motivate employees and their employers to participate in superannuation decisions nd we would encourage participation to be part of any MySuper system,” said Mr Rantall.
The AFA has used even stronger language to articulate its own response to the implementation of MySuper. In welcoming elements of the Government’s superannuation package, the AFA strongly criticised the MySuper proposals as ‘…assuming that Australians are ignorant, disengaged and disinterested in their superannuation and always will be.’
AFA CEO Richard Klipin said that while MySuper may appear to address some of the issues , it fails to address the underlying issue – which is poor member engagement and low retirement savings:
“Telling people what to do with their own money will never solve the problem of poor retirement savings,” Mr Klipin said, “only good advice and better education can do that.
We are heading back to the Nanny state, where the Government knows best
Mr Klipin added that while some of the Gillard Government recommendations, such as raising the Superannuation Guarantee (SG) from nine to 12% and using tax file number (TFN)s to find lost super have merit, the My Super recommendations reveal that the government has an overly paternalistic attitude to the Australian community. “We are heading back to the Nanny state, where the Government knows best,” he said.
