The Turnbull Government is today releasing the Terms of Reference for the first two stages of a Productivity Commission review into the efficiency and competitiveness of the entire superannuation system.
This review is an important step in implementing the Government’s response to the Financial System Inquiry and helping Australians have a better standard of living in retirement.
We have tasked the Productivity Commission to develop criteria to assess the efficiency and competitiveness of the superannuation system. Secondly, we have tasked the Productivity Commission to develop alternative models for a formal competitive process for allocating default fund members to products.
Following the full implementation of the MySuper reforms, scheduled to take place by 1 July 2017, we will further task the Productivity Commission to review the efficiency and competitiveness of the superannuation system, drawing on its work on the assessment criteria and alternative models.
The superannuation system has $2 trillion in assets and this is projected to increase to $9 trillion by 2040.
The Financial System Inquiry showed there is room to improve the performance of the superannuation system, including improving after-fee returns for members. Superannuation fees have not fallen by as much as expected, given the substantial increase in the scale of the system.
The Inquiry noted that a major reason for this is the absence of strong consumer-driven competition, particularly in the default market.
The Government is committed to increasing competition to generate the strongest possible benefits to every superannuation fund member.
The PC Terms of Reference can be found on the Productivity Commission website.