The government last week released the terms of reference for the Productivity Commission’s review into the superannuation system.

Treasurer Scott Morrison said the inquiry will use the criteria identified through the Productivity Commission’s stage one study to assess the efficiency and competitiveness of the current superannuation system, including group insurance arrangements.

As part of its assessment, Mr Morrison said the commission will evaluate the accumulation, transition and retirement phases of superannuation as well as the default, corporate and choice fund member segments, including self-managed funds.

Defined benefit funds, he said, would not be a key focus of the commission’s assessment.

The government said the review will assess long-term net returns across the system including reference to particular segments.

“Through this assessment, the commission should have particular regard to whether disclosure practices are resulting in a consistent and comparable basis for meaningful comparisons to be made between products and whether additional disclosure would improve outcomes for members,” Mr Morrison said.

It will also look at whether the system is minimising costs and fees for returns, and the impact costs and fees have on members with low account balances.

The commissioner will also consider the appropriateness of insurance arrangements inside superannuation, including the impact of insurance premiums on retirement incomes of both default cover and individually underwritten cover funded inside of superannuation.

Mr Morrison said it will also evaluate whether policy changes can improve default cover through superannuation, so that default cover “provides value for money, does not inappropriately erode the retirement savings of members of all ages and delivers consistent outcomes across the system”.

With the superannuation sector now worth $2 trillion, Mr Morrison said it is important, given the sheer size of the superannuation system, combined with its compulsory and broad nature, that the system is efficient.

“Competition is also important as it can drive efficient outcomes for price, quality and innovation. Small changes in the system can have a real impact on people’s standard of living in retirement,” the treasurer said.