The Australian superannuation industry would resemble UniSuper if Chris Cuffe had a chance to build it from the ground up.
In remarks to last week’s annual Fund Executives Association Conference, the builder of Colonial First State took it upon himself to mention a number of industry ‘elephants in the room’, one being most members’ compete lack of preparedness to take responsibility for investment decisions.
Cuffe talked up the merits of a ‘target benefits scheme’, called a ‘collective defined contribution scheme’ in some countries, in which member benefits ascribed to a DB-like formula, but the investment risk was born by the collective membership rather than employers.
UniSuper, the industry fund of which Cuffe is a trustee director, is a live example of this type of fund, which allowed “trustees to manage the aggregate risks rather than forcing each individual to fend for him or herself”, Cuffe said.
Perhaps the ultimate extension of such an arrangement would be a government guaranteed national annuities scheme, which Cuffe also supported.
Noting that household superannuation assets had grown in lockstep with household debt for at least 20 years, Cuffee also suggested the banning of lump sum retirement benefits, to discourage people from loading up with more debt towards the end of their full time working lives.