Labor’s response to the Cooper Review has dodged the big issue of longevity provisions but has addressed the ball on other problems, said asset consultant Towers Watson.
As well as avoiding post-retirement inadequacies, Labor had also failed to face problems with operational reserves, transparency, and members’ monitoring of contributions.
While criticising Labor for these decisions, Towers Watson’s managing director Australia, Andrew Boal (pictured), said there were “very few surprises” in the Federal Government’s final vision for MySuper, and its recommendations on SuperStream were broadly supported by the industry.
In its commendation of Labor on MySuper, Towers Watson was joined by AIST’s CEO Fiona Reynolds who agreed that Labor had endorsed the low-cost, commission-free not-for-profit model, and said that she expected most of AIST’s 80-plus super fund members would offer a MySuper default option.
“The industry has a big job in front of it, but low-cost not-for-profit funds – which already meet most of the MySuper criteria – are well positioned for this new era of super,” said Reynolds.
AIST commended the Government for retaining the representation trustee system of governance, thus rejecting Cooper’s recommendation to change the composition of directors on not-for-profit boards.
This commendation was echoed by Towers Watson’s Boal in his bulletin in response to Labor’s recommendations.
Reynolds added that “the Government has acknowledged that Australia’s unique representation trustee system of governance plays a key role in high-performing superannuation to consumers”.
However, scathing in his assessment of the representative trustee model is Ian Field, a former chair of the MTAA Super fund, who believes only directors with investment experience should be allowed on boards, particularly where major direct deals are concerned.
Reynolds went on to say that most workers did not choose their own super fund, relying instead on the workplace default fund.
“With the privilege of managing workers’ super savings comes an obligation to act in the best interests of fund members. The foundation of this higher duty of care is to ensure that workplace default funds meet a high standard,” she said.
While Boal commended Labor on its SuperStream response, he was disappointed that the additional costs would be covered by a further temporary additional APRA levy.
“As with the MySuper proposals, all of these costs will ultimately be borne by the current generation of fund members,” he said.