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Sydney, 11 September, 2003: The Australian Bankers’ Association (ABA) says it is disappointed that the findings of the Senate Select Committee’s Report into Portability supports the status quo.
This means that adult Australians will remain divided into two classes – those able to make informed choices about their own financial affairs and others not allowed to do so because portability is denied.
The ABA supports a fair and open superannuation system where competitive pressures would reduce costs, lower fees and improve service. In the retail superannuation sector, where there is no restriction on portability, increasing competition has reduced costs and lowered fees.
David Bell, Chief Executive of the ABA, said: “Reduced fees on new retail superannuation products highlight the benefits of increased competition.”
“If the Government’s portability regulations are disallowed consumers in those industry and employer-sponsored funds that prevent portability will remain locked into a fund that is insulated from competition.”
“Those consumers without portability cannot consolidate accounts and save on fees, and cannot shift out of poorly performing or uncompetitive funds.”
“It seems that the positions taken in this debate are less driven by good policy than by subjective beliefs that current restrictive arrangements are in the best interests of the consumer.”
“Opponents of portability and choice believe that the superannuation market is unsafe, as regulation and disclosure is ineffective and consumers have poor financial literacy skills.”
The ABA suggests that if this is the case, the best policy is to support more competition, not less, address any perceived regulatory shortfalls and urgently begin to address the problems with financial literacy.
Mr Bell said: “This Report may be viewed by history as short-sighted because it comes at a time when many Australians are disillusioned with superannuation and re-directing discretionary savings to other investments, such as property.”
“Yet, Australians are not saving enough for retirement resulting in a gap between expectation and the aspirations for their standard of living in retirement and what the present system will actually deliver.”
The ABA commends Senator John Watson, the Chairman of the Senate Select Committee on Superannuation, for attempting to progress portability while balancing competing interests on the Committee.
The ABA calls on the Independents in the Senate to support the Government’s portability model.
For further information:
Heather Wellard
ABA Public Relations
Phone: 02 8298 0411
Mobile: 0409 830 439
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