According to the FSC, the evolution of the superannuation framework has been overly focused on default options without adequately accounting for variations in customer engagement levels. This one-size-fits-all approach often fails to cater to those who are more involved and make conscious choices regarding their superannuation strategies.

The FSC articulated that relying heavily on defaults can inadvertently undermine consumer preferences and the role of financial advisors, limiting active participation in retirement planning. They identified several instances where this trend is evident:

  • The possibility of extending the YFYS performance evaluation to cover choice products, even when consumers have selected these based on expert financial advice.
  • The application of the Retirement Income Covenant, suggesting trustees offer retirement guidance despite the presence of personalized financial advice.
  • Proposals promoting automatic enrollment into retirement products or subjecting these products to default MySuper-like testing, potentially constraining consumer involvement.

The FSC emphasizes that engaging consumers with their superannuation should be foundational, empowering them to make informed decisions that align with their personal needs. To facilitate this, consumers must have access to educational tools, insights, and affordable advice tailored to their circumstances.

Based on the FSC's perspective, government policy ought to foster a landscape where consumer choice and market competition thrive within the superannuation and retirement income sectors. Moreover, dialogues around the Your Future, Your Super performance test and retirement phase policy should acknowledge the diversity of superannuation products and underscore the importance of tailored financial advice.

This advocacy comes in response to existing regulatory proposals and underscores the importance of recognizing distinct superannuation products and the critical role personalized financial advice plays in achieving optimal consumer outcomes, as originally reported by the Financial Services Council.