The Commission’s work has four clear observations: the connection between conduct and reward; the asymmetry of power and information between financial services entities and their customers; the effect of conflicts between duty and interest; and holding entities to account.
One of the best recommendations in the Productivity Commission (PC) draft report on the superannuation industry was the backing the PC gave to making permanent the current temporary (until 1 July 2020) tax rollover relief for fund mergers and transfer events.
After 25 years, superannuation was due a landmark critical analysis – and the Productivity Commission’s draft report out yesterday certainly has not disappointed in that respect.It has spotlighted many important issues I would endorse.
The next decade will see a major rationalisation of Australia’s superannuation sector – with the number of funds in Australia being cut in half. But this is a natural evolution from the current market situation which is already seeing a two-speed divide between larger and smaller funds
KPMG is concerned the Budget announcements surrounding the removal of default insurance in super for people under the age of 25, plus inactive accounts and small balances will damage the overall system for relatively little benefit.
We do not anticipate much Budget night action in the super tax area – unlike the last two years. But it is worth thinking about Treasury’s recent release on the costs to the public purse of current ‘concessions’ .