## Introduction

This submission is made by:

- • Fund Administrators & Advisers Pty Ltd (IFAA), a Brisbane based administrator of • Fund Administrators & Advisers Pty Ltd (IFAA), a Brisbane based administrator of industry superannuation funds and managed investment schemes. IFAA has approximately $9.5 billion in funds under administration;
- • Super – a profit for members industry fund established specifically for the benefit of all • Super – a profit for members industry fund established specifically for the benefit of all participants in the non-Government education sector, child and other care and community services in Queensland;
- • Super - a profit for members industry fund established specifically for the benefit of • Super - a profit for members industry fund established specifically for the benefit of employees in the sporting and recreational clubs and associated industries in Queensland.

IFAA, QIEC Super and Club Super appreciate the opportunity to make comment on the issues raised in the draft report. It is acknowledged that this study is the first of a three stage review process by the Productivity Commission, arising out of the Government’s response to the Financial System Inquiry:

- 1. A study to develop criteria to assess the efficiency and competitiveness of the superannuation system (to be finalised by November 2016);
- 2. An Inquiry to develop alternative models for allocating default members to Funds (to be finalised by August 2017);
- 3. An Inquiry to review the efficiency and competitiveness of the superannuation system (to commence after July 2017, after bedding down of the MySuper system). This will utilise the criteria developed in stage 1.

The Productivity Commission study outlines the following as the system level objectives for assessing the competitiveness and efficiency of the superannuation system:

- • superannuation system maximises net returns on member contributions and balances over • superannuation system maximises net returns on member contributions and balances over the long term.
- • superannuation system meets member preferences and needs, in relation to information, • superannuation system meets member preferences and needs, in relation to information, products and risk management, over the member’s lifetime.
- • superannuation system provides insurance that meets members’ needs at least cost. • superannuation system provides insurance that meets members’ needs at least cost.
- • superannuation system complements a stable financial system and does not impede long- • superannuation system complements a stable financial system and does not impede long- term improvements in efficiency.
- • in the superannuation system that drives efficient outcomes for members. • in the superannuation system that drives efficient outcomes for members.

These objectives are noted as being high level. The general nature of several of these objectives and the reference to meeting members needs, will be very hard to measure at a system level, given the needs of every individual are likely to be different. At the outset we state our unambiguous support for efficiency and competition in the superannuation industry. However, we have serious reservations about the premise for the 3 stage review process and the potential outcomes and consequences of this process. It is considered that competitive pressures that currently exist within the industry drive efficiency, which optimises outcomes for members. IFAA client Funds aim to offer competitive fees but also superior service through a value proposition / customer intimacy strategy, which enhances member