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Super choice - savings in store



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Media Release Investment 6c Financial Services Association Ltd 11 November 1999

Super choice - savings in store The Investment and Financial Services Association (IFSA) today released an independent report, prepared by Phillips Fox Actuaries, which found that superannuation fund choice will be beneficial for both the Australian economy and

superannuation fund members.

Lynn Ralph, IFSA CEO said: “The report provides evidence that cost savings of up to $680 million annually would flow from the introduction of choice through major reductions in expenses for members and employers.”

“These savings are expected mainly through the consolidation of multiple and Tost member’ accounts, and the adoption of e-commerce, the benefits of which will be more pronounced in a choice environment,” she said.

The report assesses the savings from consolidations of between 15 and 30 per cent in the number of superannuation accounts. Currently, the average super fund member holds 2.7 accounts. Choice will allow a consolidation of accounts and this will produce direct savings in administration charges.

The table below, an excerpt from the report, shows the estimated cost savings:

15% c o n so lid a tio n 3 0 % c o n so lid a tio n

o f m em b e r a c c o u n ts o f m em b e r a c c o u n ts

(All figures in $ million)

C u r r e n t c h a r g e s ... ;| , ■ 4 ,9 8 9 : | , 4 ,9 8 9

E stim a ted s a v in g s d u e to e -c o m m e r c e (r e g a r d le ss o f Choice) Member charges 248 248

Employer subsidy 11 11

Subtotal 259 259

C h a rg e s a fte r e -c o m m e r c e Total 4,730 4,730

C h a r g e s a fte r ^ -c o m m e r c e

1 **f£*H/Z 4 11 m

Level 24, 44 Market Street, Sydney NSW 2000 Ph: 61 2 9299 3022

Email: ifsa@ifsa.com.au Fax: 61 2 9299 3198

Phillips Fox concludes that choice will lead to immediate savings for members and regular savings in future years.

“The findings illustrate the type and magnitude of the efficiency gains alluded to by the Wallis Committee when it recommended the introduction of choice.

“The longer this policy proposal lingers, the lower the retirement lifestyle for consumers.

“IFSA looks forward to the passage of the choice legislation through Parliament as soon as practical to bring about these efficiency gains while ensuring adequate consumer protection, in line with other important legislation currently before parliament,” Lynn Ralph concluded.

Contact IFSA on 02-9299 3022 for further information. Please contact Lynn Ralph on mobile: 0417 232 958 or Richard Gilbert on mobile: 0417 247 998 for additional comment.

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Level 24, 44 Market Street, Sydney NSW 2000 Ph: 612 9299 3022

Email: ifsa@ifsa.com.au Fax: 61 2 9299 3198