One of AIST’s recommendations is a combination of mandatory employee and employer contributions plus a government co-contribution for low-income earners. Other relatively low-cost reforms could improve retirement income adequacy, particularly for low-income earners. This would include rebating the 15 per cent contribution tax for low-income earners. As well, AIST has recommended removing the $450 monthly income threshold for SG contributions, and compulsory super for self-employed. “If these measures are introduced quickly, then the urgent need to increase SG is reduced,” says Noonan. Structure The Superannuation System Review [the Cooper review] is occurring at a time of unprecedented stress within the global financial system and during a period of considerable self-examination in the nation’s superannuation system itself, says Reynolds.

AIST argues that Australia’s unique representative [not-forprofit] trustee system for superannuation funds, developed since the mid-1980s, has delivered superior results for Australian workers over a number of decades. This model “stands in stark contrast with other parts of the finance sector where conflicts of interest and unethical conduct have been widely criticised,” says Noonan. In the past two decades, the not-for-profit superannuation sector grew to managing $450 billion in retirement benefits for two-thirds of the workforce. “The representative trustee system has delivered such good governance in a tightly regulated environment,” says Reynolds, “that there have been few, if any, losses to members through defaults, malfeasance or other dubious practices.” AIST recognises that superannuation is of central economic importance to the country, and is increasingly complex to administer.

So, the institute advocates best-practice standards for the training and continued professional development of trustees. It’s also advocating for the recognition of superannuation trusteeship as a separate and unique skill set, requiring professional accreditation, says Reynolds. “The current representative trustee population, overwhelmingly drawn from employer and employee ranks, provides a wealth of experience,” she says. To strengthen the trustee system in the next decade, heterogeneity must be encouraged. This includes succession planning and the encouragement of talented younger people to become an integral part of superannuation trustee boards. “The focus is on ensuring the recruitment of trustees who are motivated by a members-first philosophy and who share the independence of judgment which has been a notable facet of notfor- profit boards over previous decades,” she says.

“The success of the equal representative trustee system in delivering sound governance and superior results for members at low cost means it’s the appropriate model for other funds which deal with mandated superannuation guaranteed contributions,” argues Noonan. AIST supports formal legislative recognition of a default fund model, including a default option and member choice options, but only as far as such legislative change can lead to better member outcomes across the whole system. Despite the shock to the entire global financial system in the past two years, Noonan asserts that a “prudent and calm approach” to managing the country’s superannuation assets is the only appropriate response to such dislocation. In that sense, AIST believes the freedom to invest has been an important facet of the long-term out-performance of Australia’s superannuation model and argues that Government mandating of investment policy would be a backward step. Representative trustees have, by their nature, a strong member focus, says Reynolds.

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