Australia. More risks than rewards seen in super fund reforms
Australia’s government is counting on superannuation system reforms to get employees to play a greater role in maximizing their retirement savings, but industry participants fear more harm than good.
Analysts warn the Your Future, Your Super reforms — outlined last October in Australia’s 2021 budget proposal and set to take effect July 1 — are likely to constrain asset allocators and hurt the disengaged workers the reforms are ostensibly focused on helping.
A final round of consultations, under the auspices of the Treasury Department, gives industry players until May 25 to urge changes on regulators.
Critics predict that, under current plans, a litany of government good intentions — working toward goals such as weeding out perennially underperforming super funds and preventing job-hoppers from accumulating dormant retirement accounts — could come to naught, due to faulty design and execution.
Their biggest focus for now is on the government’s plan to introduce an annual performance test for the MySuper balanced default options super funds were required to launch eight years ago to ensure that even Australian workers unwilling to learn the first thing about the country’s highly regarded A$3 trillion ($2.31 trillion) defined contribution system could count on decent retirement outcomes.
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