Keep Labor hands off $4.4 trillion ‘honey pot’ of superannuation
Let’s revisit why the superannuation performance test was implemented in the first place. The test was a key tenet of the Coalition’s “Your Future, Your Super” reforms legislated five years ago, which were designed to address systemic inefficiencies in the super system that meant Australians were retiring with less than they deserved.
At that time there were three million Australians in an underperforming superannuation product and 4.4 million people had multiple superannuation accounts, with multiple fees and insurance premiums.
The changes, which ensure your chosen fund follows you from job to job, combined with transparency measures and comparison tables on the ATO website, have seen the number of duplicate or underperforming accounts fall dramatically, saving Australians thousands of dollars in retirement.
At that time, Australians were paying more in fees on their superannuation accounts than they were in electricity and water bills combined.
According to Rainmaker, five years on and superannuation fees are now at record lows. This is because the performance test demands fund managers are held to account for the investment performance they deliver and the fees they charge. Should a fund underperform against clear and objective benchmarks there are significant consequences.
The message was clear – improve or exit. And the performance test worked.
A senior regulator informed me just this week that while about one million Australians were in underperforming funds in 2020, they estimate the number to be around 20,000 today. That is thousands of Australians whose retirement will be more comfortable because of the changes made five years ago.
It’s an inconvenient truth for Labor that your super fees are lower and your super returns have improved because of the Coalition’s reforms to improve transparency and accountability.
Since the introduction of the reforms, superannuation funds have surpassed performance expectations. According to SuperRatings, growth funds have averaged 9.9 per cent a year in the past five years, and balanced funds 8.3 per cent.
So why change something that has worked so well?
It’s painfully obvious. Labor is desperate to use the $4.4 trillion honey pot of super for “nation-building” projects (aka Labor’s political agenda). The problem is that investments into Labor’s policy priorities, for the most part, don’t stack up financially.
With accountability and scrutiny by the regulators, super fund trustees simply cannot justify making investments that are not in the best financial interests of members. Unless you change the goalposts of the performance test.
Those renewable energy assets or social housing projects are suddenly within the investable universe. Mission accomplished.
Most people are so disengaged from their super they probably wouldn’t even know that the personal wealth they accumulated was sacrificed for the government’s “productivity” agenda.
For the same reason we are opposing the introduction of tax on unrealised capital gains, the Coalition will always protect the hard-earned retirement saving of ordinary Australians.
Change to the performance test in the name of “productivity” is just the latest Labor attack.
Jane Hume is a Liberal Senator from Victoria.
Confident conservatives do not need to import an ideology
Of all the things that could really move the dial on productivity in Australia – lower energy prices, genuine tax reform, more flexible industrial relations, a step-change lift in our educational standards – only a Labor government could come up with changes to the superannuation performance test as the key to unlock Australia’s economic growth.