“Commission bans was one of them, and certainly, there are full marks for that,” he says.
“Lost super was another one of those five issues, and the tax file number, that will go a long way to clearing it up. Multiple accounts – again, we’ve got some more consolidation, so that should happen. The defaults – that’s perhaps a work in progress; but MySuper reforms will really help.
“And the fifth one is advocacy, and that’s [creating] an advocacy group, that I know the Minister’s talked about, and that’s ongoing.”
Michael Drew, Professor of Finance, Griffith Business School, and managing director, lifestyle strategies, QIC, says raising the SG is an important step towards achieving retirement income adequacy, but it’s by no means the only step, and on its own is insufficient. More attention needs to be paid to the specific requirements of super fund members as they approach retirement.
“You can throw money at this problem but it’s a coordinated set of levers that need to be managed by the fiduciaries around contribution rates, around education, around the asset allocation decision,” Drew says.
“I keep coming back to this point: what’s ‘safe’ and what’s ‘risky’ changes over your life. The sort of financial market conditions we have today, for instance, for a 25-year-old are important, but in the grand scheme of things don’t necessarily matter. If you’re 62 years old today, and you’re within three or four years of your retirement, they absolutely matter.
“So, it’s about a coordination – again, it’s the ‘outcome’ conversation, about contribution rates, about the asset allocation and the system moving, to continue its long heritage of member-centricity.
“So there are a number of challenges within the system. Moving from 9 to 12 per cent is very important – like anything, throwing money at a problem can help, [and I] certainly support that – but there are [other] things we can do. MySuper’s part of the journey, and also education, literacy, and the fiduciary responsibility around asset allocation is important as well.”
Former NSW Treasurer and Attorney General, Peter Collins, is now a director of the industry fund HOSTPLUS. Collins says he supports lifting the SG “because it’s good policy”.
“I think that it has to go to 12 per cent because, to take what Bill Shorten said, earlier, 9 per cent is simply not going to provide Australians with the kind of retirement that they need; and there are only two ways it can be achieved – that is to address the issue now, by increasing the superannuation guarantee to 12 per cent, or taxing people more to pay for the age pension later on, and then you get into all sorts of issues about inter-generational equity,” Collins says.