UniSuper, the industry fund of which Cuffe is a trustee director, is a living 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. When returns swoon, funds would issue a negative crediting rate to members. 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, Cuffe also suggested the banning of lumpsum retirement benefits, which are commonly used to finish off housing mortgages, to discourage people from loading up with more debt towards the end of their fulltime working lives.
“We have to get some form of income stream in retirement. Otherwise, what is the whole system about? It’s not about the lump sum.” He also theorised about an industry-wide administration overhaul, which would leapfrog the SuperStream recommendation from the Cooper Review and make the Australian Tax Office (ATO) the only channel through which payments to and from funds can be made. Three identification codes would match accounts with members – a tax file number, a fund code for investment vehicles and a transaction code – and the ATO could update each beneficiary’s single record and appropriately deduct taxes. “Even if the ATO halfstuffed it up, the savings would be monumental,” Cuffe said. Under this entirely accountbased system, funds managers would not need to provide special purpose superannuation vehicles, he said.