They say that to a man with a hammer, every problem looks like a nail. When it comes to the retirement incomes sector in Australia, the equivalent mindset seems to sit within the head of Jeremy Cooper.

The Australian newspaper today reports that Cooper is about to issue a call for a licensing regime to cover superannuation funds wanting to offer retirement products to retirees. Cooper, you may remember, designed the MySuper regulatory regime over 10 years ago that covered the accumulation phase of retirement savings. Cooper gives me the impression of someone who instinctively assumes government action is essential to drive good outcomes for retirees. He gives me the impression of not having an understanding of how good outcomes can emerge through freedom for funds to innovate and work out themselves what customers need and want.

The background to the current situation is that the Minister for Financial Services has said superannuation funds are not moving fast enough in preparing retirement income products for the market. Cooper says there is a lack of clear guidance for funds to do so and that the industry needs clear rules. True, but that is a bit rich coming from someone who is probably best known for devising a MySuper regime that produced nothing for members but confusion and nothing for funds but increased complexity and higher costs. I challenge anyone to show how MySuper has had any positive effect at all for anyone saving for retirement.

The ever increasing regulations crushing the superannuation sector are directly responsible for slow development of retirement income products. Look at the product disclosure regulations as an example. The volume of material that must be provided to new members has resulted in brochures that run to hundreds of thousands of words that nobody would read. Like a Patrick White novel, the material is so dense that getting to page 3 is exhausting after which most people give up. Yet the regulatory types refuse to acknowledge it is the regulatory regime itself that is the cause of problems, not solutions. Funds going slow on retirement income products are almost certainly concerned that given the regulatory burden on the simpler accumulation phase, the regulatory burden on the more complicated retirement drawdown phase will be even worse, even more costly and just as pointless.

Now, if the reports are true, Cooper will call for more regulation by the heaviest burden possible: licensing. I suppose it is to be expected if your mindset is closed in that way. It is worth pointing out that there is already a principles based obligation on funds to have a Retirement Incomes Covenant in place. A principles based regulatory oversight makes a lot of sense. It is useful for the sector to know the principles and let the individual funds design the detail. One reason for slow progress in product development, if the Minister is to believed that progress is slow, is a lack of member demand. That’s possible. The other potential reason is that funds are wary of precisely another round of excrutiatingly detailed regulation coming from the heavy hand of bureaucrats suffering groupthink.

The way to remove speed limits is for the Minister to say that the Government believes the principles based regime is sufficient and no further detailed regulations, or licensing obligations, will be implemented. Banishing the unimaginative regulatory zealots to irrelevance would help enormously.

Retirement income products are not new. Annuities, as an example, have been around for centuries. It may surprise some people that they developed in the absence of government approval by license.