Efficiency as effective as higher preservation age

David Whitely

The Industry Super Network (ISN) has found a way of linking the proposed lifting of the superannuation preservation age to the question of financial adviser commissions.

ISN executive manager David Whitely has claimed that lifting the preservation age to 67 would not be necessary if the Government moved to increase the efficiency of the superannuation industry.

He said modelling undertaken by Access Economics and commissioned by the ISN found an increase in net performance of less than 1 per cent across the industry would be comparable with increasing compulsory contributions to 12 per cent.

Whitely also pointed to a recent study conducted by ISN on the opportunity cost of workers’ superannuation savings being directed to underperforming retail super funds by financial planners paid by commissions, and away from better performing funds.

He said the Government should seek to exhaust every option to improve how much super workers had before increasing the age that workers could access their own superannuation.

“The first and most obvious step would be to get the superannuation industry to increase its net performance by eradicating the conflicts of interest inherent in the sales commission system,” Whitely said.