Industry divided on funding Retirement Commissioner

Fund managers are divided over whether they should help the Government fund the Office of the Retirement Commissioner.

When the office was established it was jointly funded by the Government and managers, with 10 managers paying $100,000 each annually. However, no managers are now funding the office.

Finance minister Michael Cullen says the issue of the office's funding is "a real problem" between the Government and the industry.

His view is that the funding arrangements for the office should be a partnership between industry and Government, however the industry isn't too keen on the idea.

BT Funds Management chief executive Craig Stobo says BT withdrew its sponsorship as "economically it didn't stack up."

While he thinks a partnership between industry and government is a laudable idea, he doesn't think there is sufficient private benefit for a firm like BT.

He reasons that BT, which promotes unit trusts, is a niche player against the backdrop of the ORC's broad savings message.

Stobo says he would like to see public policy changes that help the industry and put the various products on equal footing. Some possible changes include capital gains tax and "much lower taxes all around."

"We wouldn't have to have a Retirement Commissioner if the savings environment was tax neutral," he says.

Likewise Armstrong Jones boss and Investment Savings and Insurance (ISI) chairman Paul Fyfe isn't in favour of the private sector funding the office. (AJ has never funded the office, instead it has put money into its own educational material such as its Financial Passages book).

Fyfe says the ISI has made it clear to the finance minister that it considers the ORC should be fully funded by the Government.

He argues it's very hard for all the industry to get behind the ORC when the office is being supported by a firm's competitors.

He says the industry would get behind the ORC, refer to its information and promotes its material, if that material was free of competitors names and logos.

"If the Government funded the Retirement Commissioner then I believe all of the industry would get behind the efforts of the (office)."

AXA chief executive Ross McEwan take a contrary view. He says the two reasons AXA stopped sponsoring the ORC was because not all industry players were helping to fund the office and the education campaign wasn't broad enough.

He says some fund managers were getting a "free ride" from their competitors who were fronting up with sponsorship dollars.

The other main concern was that the government wasn't doing enough.

"Not enough has been put behind (the ORC) from a government perspective."

McEwan says he is open to the idea of a partnership between public and private sector funding for the office but such an arrangement would require the establishment of firm goals.

If the ORC continues with its reasonably limited role then the government should fully fund it themselves, he says.

McEwan would like to see the ORC monitoring what was going on in the industry and providing the government with policy advice.

AMP says education is vitally important and it already runs a very comprehensive workplace education programme.

A spokesperson says that the government has a role to play to increase awareness of need to save, while the industry's role is to deliver on what the government legislates for.

She says AMP has always strongly supported awareness and education campaigns and it will continue to do so.

"We will continue to support the role of the ORC as a government body."