ASFA rejects Costello's government-run super proposal

ASFA has rejected the notion put forward by Peter Costello, chairman of Future Fund, that Australian’s private superannuation saving should be switched to a government-run administrator and investment fund. 

Costello said the $133 billion Future Fund could take the role of national safety-net administrator, reported The Australian.

Dr Martin Fahy chief executive of ASFA said that the proposal had significant problems.

Fahy said that the efficiency and competitiveness of our superannuation system benefited from super funds being diverse; the proposal, he said, was in essence the nationalisation of private, individual superannuation savings. 

Fahy continued, ‘The Future Fund effectively operates as the Australian Government’s wholesale investment manager, however it lacks the required governance framework and administrative capabilities needed to operate in a superannuation context.’

‘Broadening the role of the Future Fund – from managing money to meet public liabilities to also managing private superannuation assets – would represent an erosion of the trustee and investment governance frameworks critical to the delivery of member returns.’

Fahy said such a move would also increase the political risk for the Future Fund and the government, and provide members with the sense that superannuation accounts are being underwritten by the government. 

Costello’s proposal would require the government to set up and run such a fund, with no material need for such a shift; Australia has perfectly capable, efficient superannuation administrators.