Improvements to retirement phase of super welcome, but faster progress needed
Super Consumers Australia says Minister Jones’ announcement is an important first step toward making super work for people in retirement, but many of the measures will take years to result in improvements for Australians.
Australia’s superannuation system has been a world leading success in building a pool of retirement savings across most of the population. However, it has been far less successful in using these savings to deliver incomes in retirement.
“The retirement system today is complex and does not support people with safe products and independent guidance. Today’s announcement is an important first step towards improving the system, but we won’t see many of the benefits for several years,” said Katrina Ellis, Deputy CEO.
“We welcome the commitment to expand independent guidance via Moneysmart. In an age of conflicts, people’s trust has been eroded. A strong super system needs to be underpinned by high quality advice and guidance. The reliance on super funds for advice and guidance has come at a cost. Our recent report on fund retirement calculators showed many of them had serious failures. Trusted independent guidance from Moneysmart is essential and it is available now. The support announced today will improve people’s access to high quality retirement planning resources.”
Super Consumers is keen to ensure that the voluntary best practice principles announced today will focus on delivering good customer outcomes, including fit-for-purpose retirement products that deliver a dignified standard of living and standards for timely service from super funds.
“We’d like to see mandatory standards rather than voluntary principles. If you look at the customer service failures that came to light last week, it is clear that this is not an industry that has a strong appetite for self improvement in the absence of government direction.”
“It’s one thing for super funds to agree to best practice principles that they may voluntarily adhere to, but it is another thing for those best practice principles to result in good customer outcomes. We will engage with the consultation process to make sure this happens.”
Although the new Reporting Retirement Framework will provide transparency on retirement products, it won’t be ready until 2027. The regulator APRA has been collecting data on account-based pension investment returns and fees since 2021 but has not yet published it.
“Most retired people with super are in account-based pensions today, which are similar to how super is invested during your working life. But we have no idea which funds are better than others when it comes to the retirement phase. APRA has been sitting on the data to compare fees and historical returns in account-based pensions for several years. We don’t need to wait several more years, the data should be published now.”