It’s pro forma of Crikey to lament the rise and rise of commissioned modelling and other forms of propaganda dressed up as “independent” contributions to public debate.
Special recognition, therefore, is due to the Financial Services Council, which commissioned research to support its submission to the Productivity Commission on choice in compulsory superannuation, declared the research backed its submissions and attacked it, only for the research in fact to demolish its case.
In a submission to the PC on April 10, the Financial Services Council, which represents the wealth management industry and the retail superannuation funds controlled by the big banks and AMP, urged that the Fair Work Act be amended to prohibit industry agreements in which default super funds are specified. Instead, any fund fitting the new MySuper criteria would be automatically assumed to fit the criteria for an eligible default fund.
This would undermine the rival industry superannuation fund sector, which benefits from awards and enterprise agreements nominating industry funds jointly run by employer organisations and trade unions.
Nothing especially heinous about that — just ordinary pleading from an industry sector.
The submission cited new focus group research of employers by marketing firm Westfield/Wright, helpfully attached to support the council’s argument:
“The research produced the following two key findings which reflects a collective view that the current system is in urgent need of reform. (1) Employers want empowerment and freedom of choice of their own default fund — they do not want any external party involvement (unions or employer groups) …”
Unfortunately the research doesn’t quite offer that key finding. The focus group report shows employers want the whole process of choosing a super fund massively simplified. The report finds:
“On the desired number of default funds for employers, the overall message is that ‘less is more’ … The bald truth is that the ‘ideal’ number of employer-selected default funds would actually be ‘one’! However, accepting that this isn’t within the scope of this inquiry, those involved in the administration of superannuation welcomed the broad aim of simplifying and reducing the number of default funds listed. The aim here, employers felt, should be the facilitation of choice by them, rather than a complicated process of eligibility criteria. It should be the government’s job to present them with the facts, from which they can then decide suitability for their own workers’ needs.”
So, the employers surveyed seem to, erm, want less choice about default funds, not unlimited choice from all MySuper products.
The focus groups also yielded some choice comments about super funds themselves. Industry funds elicited the observation “there’s a lot of secrecy about who gets onto these funds … and why shouldn’t WE know how much they are being paid?”. But retail funds fared much worse. “Nickel and dimers” was one description. “I don’t want financial advisers being paid fat, shadowy commissions to recommend a particular fund,” another participant complained.
Kudos to the Financial Services Council for its intellectual honesty in attaching such critical stuff to its submission. It’s an increasingly rare quality these days. It’s just a pity they don’t seemed to have read it in detail before doing so.