There are some uncomfortable truths in the Productivity Commission’s draft report: there are way too many super accounts; the cost of insurance has sometimes been paid at the expense of young and casually employed people building up balances in super; and there are some underperforming super funds. Most not-for-profit super funds are high-performing but a smattering are not. Most of the underperforming funds are in the retail sector.

As the superannuation industry, we need to be held to account by our members, government and the community. There is no place for super funds that underperform in the long term. Unnecessarily duplicated accounts should be consolidated.

Governments past and present also need to be held to account, particularly where they have been the brake on improving efficiency and consumer protections. There are plenty of examples of where this has happened.

With its ideologically driven disdain for the Fair Work Commission, the current government has stalled the default selection process for four years.

Despite calls from the Australian Institute of Superannuation Trustees and others to re-start the process, there was no attempt to implement increased consumer protections and accountability measures to remove underperforming funds from the default space. Parliament passed these measures back in 2013 and the government itself had told the Federal Court it intended to implement them. As a result of the government’s inaction, thousands of Australian workers have been allocated to funds that should not have retained their default status.

This isn’t the only area where successive governments have sat on their hands and ignored reforms that could truly make a difference in member outcomes.

The auto-consolidation of lost and inactive accounts was meant to start in January 2014. Following extensive discussions with the super industry, the government had announced in 2011 that members would have a streamlined process for consolidating accounts and avoiding paying unnecessary fees, including insurance premiums, on multiple accounts. Any accounts with less than $1000 were to be automatically consolidated into the current active account, unless the member opted out; however, the government stopped this plan before it even started.

Instead, it increased the number of lost accounts transferred to the Australian Taxation Office, where the savings in these accounts are counted as consolidated revenue until claimed. The Productivity Commission’s draft recommendations ignore these stalled reform mechanisms, and instead propose dismantling the system as we know it.

The report fails to put into context the success of the Australian superannuation system and the fact that, by world standards, we are starting from a very high base. The problems the commission identified are real but can be resolved without a sledge hammer.

The Productivity Commission also ignores Choice superannuation products, where the bulk of assets in pooled funds lie, and where underperformance is even more systemic. This is despite the commission finding that not-for-profit super funds systematically outperform for-profit super funds and feature overwhelmingly in the top-rated MySuper products, with default super posting (on average) investment returns almost 2 per cent a year higher than in Choice super.

In spite of this, the commission hasn’t made any draft recommendations that are directly about investment performance. There’s a weak recommendation that people being gouged by now-illegal, but sometimes grandfathered, trailing commissions should be told about them. A recommendation to ban all trailing commissions must surely be in order.

We do need to do more – much more – to ensure that we have the community’s trust but it’s a bit rich for the financial services minister to be scolding the super industry about these issues when the government should have worked with us to address these problems. Many of them could have been largely fixed years ago.

David Haynes is executive manager, policy and research at the Australian Institute of Superannuation Trustees.

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