while governance standards have been tweaked here and there. What might
have been a significant change—introduction of fund choice for most
employees in 2005—has failed in practice, given the tiny share of people
who bother to choose.^27 This certainly is not for want of choice: in 2014 the
194 biggest APRA-regulated superannuation funds all together offered almost
44,000 different investment options.
Rather, the salient trends evident from the early 1990s have continued: the
value of superannuation assets has grown faster than national economic
output and SMSFs have outpaced the growth of other sectors as wealthier
households escape the high costs of APRA-regulated funds. Retail and industry
funds have continued their battle for market share, while corporate and DB
funds have dwindled. At the same time, Australian households, especially
those nearing retirement age, have become more vulnerable to outcomes in
financial markets (whether they realize it or not).
This is likely to continue. The Labor Party is committed to increasing the SG
and making the taxation of superannuation earnings more progressive. The
Coalition plans to strip back the significant competitive advantages afforded
to industry funds and reform their governance. Currently, where new employ-
ees do not nominate a superannuation fund (and the vast, uninterested, bulk
do not), employers are obliged to direct their SG contributions to funds
specified in one of the 122 awards. Almost 90 per cent of these were industry
funds in 2014, which therefore enjoyed the lion’s share of $9 billion in default
superannuation contributions, according to a 2015 estimate by the Financial
Services Council. In 2015 a bill to ensure a third of industry fund directors
were‘independent’was introduced to parliament. While improving job pros-
pects for professional directors and consultants, none of these changes is likely
to reduce costs for members.^28
10.6 Conclusion
While Australian retirement policy was at the vanguard of innovation at
the beginning of the twentieth century, Australia had become a laggard by
the early 1980s. Even New Zealand—which now has the simplest, least inter-
ventionist approach to retirement policy among OECD nations—operated a
publicly-funded DB system from 1938 and a compulsory saving system in
(^27) Until July 2005 employees could not choose into what fund their mandatory superannuation
contributions were paid. Contributions were typically paid into funds specified in industrial
agreements or selected by employers. 28
Indeed, some academic evidence suggests‘independent’directors destroy corporate value
because their ownfinances are not dependent on the performance of the company in question.
See the work of Swan and Forsberg (2014).
We Must All Be Capitalists Now