The federal government’s Stronger Super reforms look set to alter the competition dynamic in Australia’s superannuation sector, with further consolidation a potential reality, Association of Superannuation Funds of Australia (ASFA) has said.
ASFA chief executive Pauline Vamos said the MySuper elements of the government’s superannuation reforms would be an easier vehicle for the industry to engage with.
“I think MySuper potentially offers an opportunity for new providers to engage with the industry. It’s a way to enter the industry,” Vamos said.
“Often to enter a new industry where you’ve got no legacy products, no legacy system, where you’ve got a fair bit of capital behind you [and if] you already have a customer base, then this [MySuper] may offer a real opportunity.”
However, she said the reforms could force some funds to reconsider their options.
“As it’s becoming very competitive, they [funds] might decide the only way they can really be competitive is to look at a partner or a merger,” she said.
“So we are seeing a lot of funds look at what is happening with Stronger Super and saying: ‘How are we going to respond to this and how should we respond in the best interest of our fund members?'”
Yet, she said she understood engaging in such a conversation would be difficult for superannuation fund boards.
“Until now, we haven’t really been able to finalise those conversations because the legislation has not been clear,” she said.
“Now, we have a much better idea that the reform process has started and it will continue.”
On 21 September, Financial Services and Superannuation Minister Bill Shorten announced the Stronger Super reforms.
The draft legislation would be released in a number of packages in the coming months, Shorten said.
“Given the breadth of the Stronger Super reforms, legislation will be introduced in several tranches over the coming months and in the first half of 2012,” he said.
“Consultation with the stakeholders will be undertaken on each tranche of legislation. The exposure draft legislation with the core elements of MySuper will be released in the next few weeks.”
