MySuper and Superstream are all well and good, but the Government should also take up the Cooper Review recommendation to phase out member protection costs, a major fund CEO said yesterday.
The CEO of HostPlus, David Elia, said while the MySuper proposal would mean little for the industry fund other than a rebadging of its existing default fund, the Government had not yet announced anything to defray the $13 million annual bill the fund faces on member protection costs.
Elia said member protection was an example of cross-subsidisation that impacted the majority of members negatively.
The Association of Superannuation Funds of Australia (ASFA) has previously echoed this opinion, saying that member protection “acts as a disincentive for members with small balances to amalgamate their accounts, which is one of the major contributors to industry costs. The complexity and cost of member protection now outweighs the intended benefits and the cost of this subsidy is effectively borne by other members, which is unfair on those members who have taken the trouble to merge their super accounts.”
However, Elia hoped that future Government uptake of Cooper Review recommendations would not impact instances where cross-subsidisation was positive, such as the purchase of group insurance policies where the younger member may arguably subsidise the old, but everybody benefited from the scale of collective purchasing power.
Elia was on the Gold Coast yesterday for the official launch of the Members Equity/HostPlus shopfront, sited in Pacific Fair near Jupiter’s Casino.