New rules 'will rebuild super trust'

Among reforms detailed yesterday, oversight powers for regulators in the superannuation sector will be boosted, while fees, transactions and administration processes will be streamlined.

The head of the National Australia Bank-backed MLC fund, Steve Tucker, said the landmark reforms will bring to an end the long-running battle between retail and industry funds, particularly when it comes to the fierce debate around fees.

"Whilst industry funds are a relevant and viable option for many Australians, their contribution to the super debate has, at times, been unhelpful and divisive and serves to undermine trust in a system which is largely operating well," Mr Tucker said at a Committee for Economic Development of Australia forum.

"With the removal of commissions and the introduction of a best-interest duty and two-year opt-in process, the campaign the industry funds have run against retail superannuation and financial advice can no longer exist."

He said the division in the ranks of the superannuation industry had led to rapid growth in self-managed super funds in recent years.

The Association of Superannuation Funds of Australia said yesterday the changes would deliver increased confidence in the industry. For consumers this means greater oversight of the provider and a greater focus on costs, commissions and after-tax returns, the association's chief executive, Pauline Vamos, said.

"These reforms protect the financial interests of those who are not engaged with their super, as well as respond to the overarching need for the industry to be set up to deal with the growing pool of retirees."

Damian Hill, the head of REST industry super, one of the nation's biggest industry funds, said the package of reforms will improve the infrastructure supporting the superannuation system.

"This should ultimately lead to lower costs and better outcomes for members," Mr Hill, also speaking at the forum, said.

Detailed in reforms were plans to roll out MySuper, a low-cost default superannuation product. This would make it mandatory for employers to contribute into a fund offering a MySuper product if an employee has not chosen their own fund.

Retail funds initially resisted low-cost superannuation funds, although Mr Tucker yesterday said he supported the intent behind such a fund. However, he said it was important to ensure the introduction of MySuper wasn't at the expense of innovation and competition in the industry.