Consumers may be disengaged from their superannuation but there is insufficient evidence to attribute this to lack of choice and competition, according to Labor Senator Chris Ketter.
Speaking at a Financial Services Council (FSC) BT Political Series breakfast this week, Ketter told a panel discussion he was wary of a system that offered no legal default superannuation option.
He said opening up competition could result in “unforeseen problems” for consumers.
“As a jaded union official, some might say, my experience with the real world is when people start a job they’re very open to what their employer tells them is the status quo in their workplace,” Ketter said.
“And even though people might technically have a very wide choice as to what they can opt for, the employer generally has a very significant input into that.
“I must say that if we’re talking about competition as the answer, I wonder what the question was in the first place.”
Ketter, who is also chair of the Senate Standing Committee on Economics, asked if the absence of competition had hindered the system or if it explained why Australia’s super system was the third best in the world after Denmark and the Netherlands.
Liberal Senator and deputy chair of the Senate Standing Committee on Economics, Jane Hume, told the panel discussion Australia remained one of the highest charging superannuation nations in the world, whether it was default funds, selection of funds, optimal or suboptimal funds.
“I’ve worked in the industry. I know how hard it is to get to drive fees down. We all go through tight times in the organisations that we work for but it is fundamentally important,” she said.
Hume said she hoped competition would propel that reduction in fees, but not necessarily through the options systems or anything else that has been proposed.
She said her side of politics shunned paternalism and favoured choice, personal responsibility and freedom, and with that carried the responsibility in making mistakes.
“The frustration of this industry is it is so big and has so much potential to do so much good but it is possibly one of the most partisan industries in the country. I can’t think of a more partisan [industry] which is a great frustration,” she said.
“How to go forward is coming together and finding some middle ground and what’s best by focusing on the member outcomes, not pandering to any particular industry sector.”
The Productivity Commission was currently examining the efficiency and competitiveness of Australia’s $2 trillion superannuation system, with the final report of Stage 2 set for release by the government on 17 August.