Essays on Competitive Implications of the MySuper Reforms Case Study

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The paper "Competitive Implications of the MySuper Reforms" is a wonderful example of a case study on macro and microeconomics. The objective of the MySuper reforms, according to a preliminary review report published by the government in April 2010 “ … is predicated on providing a simple, cost‐effective product with a diversified portfolio of investments for the vast majority of Australian workers (shown to be above 80 percent of members) who are invested in the default option in their current fund. ” (Australian Government, 2010: 1) Calling MySuper a ‘ product’ is not necessarily inaccurate, but it might be a bit misleading; rather than being a single, identifiable retirement saving and investment package, it is instead a set of specific criteria to be applied to the packages offered to companies, that they can in turn offer to their workers as the default superannuation savings option. While the MySuper reforms are described by Prime Minister Julia Gillard as part of “ Labor’ s commitment to ensure all Australians enjoy a secure retirement” (Gillard, 2010), they have come under fire from some in the superannuation industry, who have complained that the program hinders fair competition and is “ ... overly paternalistic and will entrench disengagement and disinterest, ” among workers.

(McDonald & Daley, 2010) This paper will summarise the key provisions of the MySuper program, and explain what might be their impact on competition within the superannuation industry. The MySuper Reforms The MySuper reforms comprise a number of basic standards that a MySuper product will have to meet in order to used made available as the default option for workers who do not choose a specific superannuation plan or prefer to let their savings be managed by a trustee.

The first and most significant regulation is that fees will be greatly reduced; entry fees for joining a MySuper fund will be abolished, and exit fees will be limited to only those that can be justified as cost recovery. (Gillard, 2010: 2) The report of the Cooper panel which recommended the reforms estimated the savings for an average worker over his or her working life to be $33,000 (Barrymore, 2010), with estimates of the extent of the fee-cutting ranging from 30 to 40 percent.

(McDonald & Daley, 2010; SBS, 2010)

References

ASFA. (2010) “The Cooper Review – My Super”. Association of Superannuation Funds of Australia [Internet], 2 June 2010. Available from: http://www.superannuation.asn.au/cooper-MySuper/default.aspx.

“Australian Election Briefing: Superannuation”. (2010) Norton Rose Australia [Internet], July 2010. Available from: http://www.nortonrose.com/knowledge/publications/2010/%5BAustraliaElectionBriefing%5D/pub29784.aspx?page=all&lang=en-gb.

Australian Government. (2010) “MySuper: Optimising Australian superannuation”. Second Phase One Preliminary Report, 20 April 2010. [Internet/PDF document] Available from: http://www.SuperSystemReview.gov.au.

Barrymore, K. (2010) “Cheap MySuper funds come under fire from superannuation experts”. Herald-Sun [Internet], 27 August 2010. Available from: http://www.heraldsun.com.au/news/national/cheap-mysuper-funds-come-under-fire-from-supperannuation-experts/story-e6frf7l6-1225910663505.

“Central plank of Cooper Review is MySuper”. (2010) Financial Standard [Internet], 5 July 2010. Available from: http://www.financialstandard.com.au/news/view/29203/.

Evans, G., and Perry, M. “The Cooper Review Final Report”. Taxpayers Australia [Internet/PDF document], July 2010. Available from: http://www.taxpayer.com.au/downloads/The_Cooper_Review_Final_Report_SMSFs.pdf.

Gillard, J. (2010) “Fairer, Simpler Superannuation”. Australian Labor Party, 31 July 2010. [Internet] Available from: http://www.scribd.com/doc/35166354/MySuper-Fact-Sheet.

Korporaal, G. (2010) “MySuper a good idea that simplifies saving for retirement”. The Australian, [Internet] 6 July 2010. Available from: http://www.theaustralian.com.au/business/opinion/mysuper-a-good-idea-that-simplifies-saving-for-retirement/story-e6frg9of-1225888222529.

McDonald, S., and Daley, G. (2010) “Australian Pension Industry Needs Lower-Fee ‘MySuper’ Fund, Review Says”. Bloomberg [Internet], 5 July 2010. Available from: http://www.bloomberg.com/news/2010-07-05/australian-pension-industry-needs-lower-fund-fees-government-review-says.html.

SBS. (2010) “PM pledges low fee super scheme”. World News Australia [Internet], 1 August 2010. Available from: http://www.sbs.com.au/news/article/1316342/PM-pledges-low-fee-super-scheme.

“Supercharge Your Super”. (2010) Industry SuperFunds. [Internet] Available from: http://www.industrysuper.com/understanding-super_supercharge-super.aspx.

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