Assistant treasurer Josh Frydenberg wants an income replacement bracket to be part of the debate in setting an agreed objective around superannuation.

This is part of a broader retirement income policy examination the government is undertaking. The “Holy Grail of reform” is the interaction between taxation, superannuation and pension, Frydenberg told delegates at the Financial Review’s bank and wealth summit.

“Do you want your super, for example, to be two thirds of your last salary? What is your target rate when you finally get to retirement? These all have ramifications, but are worthwhile discussions,” he said.

Frydenberg’s position on superannuation is largely drawn from research conducted by the Grattan Institute and the Financial System Inquiry, he quoted both in his address and based on this research, he believes the way to give the best outcome to consumers is to increase competition in the default sector for the purpose of forcing fees lower.

“These are rivers of gold and I think getting more competition is important,” he said.

He acknowledged that lessons had been learned from last year’s politically disastrous budget and wants to bring stakeholders on board, but he expected “industry funds to be waiting with their baseball bats ready to mount a very big public campaign”.

The Grattan Institute’s Super Saving’s report, which the assistant treasurer used to support his position, came under heavy scrutiny from multiple players in superannuation at the summit, with Chant West leading the charge in critiquing the assumptions the report was based on and how data was used to inform results.

Warren Chant, director of Chant West, said that seven of the 10 largest not-for-profit funds, who all had higher fees, were in the top quartile of performers giving members the greatest return. He added there is more than enough funds with scale to create competition and the model the Grattan Institute proposed was based on Chile in 2008, a time when the country only had five funds. Since introducing the tender system this number has increased to six.

Melinda Howes, general manager of Superannuation at BT Financial Group, Paul Carter, executive general manager Corporate Institutional Wealth at MLC and Danielle Press, chief executive of Equipsuper all agreed that fundamental premises and assumptions in the report were wrong.

David Atkin, chief executive of Cbus, concurred that while fees were important, they weren’t everything and the debate needed to be reframed around the net benefit to the member.

He highlighted the idea that it doesn’t cost twice as much to manage double the money but manager’s fees has been tied to this model, as such it would be worth industry funds negotiating as a block to bring the fees down.

Dr Jim Minifie, program director of Productivity Growth at the Grattan Institute attempted a defence saying, that while many people do get a good deal, there were also many that didn’t and increased wholesale completion should exist in MySuper products. He said Australians were paying $200 per year in fees while the number should be half that, but admitted this was because an average person had two accounts, each one costing $100, and further account consolidation across the industry would help solve this particular issue.

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