At a recent industry conference, in one of the more interactive sessions, a group of trustees and staff was asked to discuss and respond to a series of scenarios facing a superannuation fund board in the latter part of this decade. This sort of blue-sky exercise is not uncommon at industry gatherings. One of the scenarios posited a large fund that had made a direct investment in a national aged care provider, primarily as a secure, long-term investment. The decision was being interpreted by observers as being partly in response to Government urgings for more investment in the aged sector and a natural progression for a fund with more than 15 per cent of members in pension products that included an innovative program of “health and lifestyle” support. What was striking about the discussion was the second aspect of the scenario. The ongoing community debate around intergenerational equity had gathered a head of steam through the middle of the coming decade. It was now being reflected within the fund, sparked by State and Federal Government proposals for new taxes and levies to help meet the overall health and welfare costs of an ageing population. Younger members, particularly those under 45, were questioning the aged care investment announced by the fund and taking to various forms of social media to express their suspicion that, along with increased taxes, their super was also being used to subsidise the growing costs of the old. Some were advocating for a resolution at the next annual general meeting, calling on the fund to withdraw from the aged care investment.
While many of the session participants thought some aspects were far-fetched, there was growing recognition that the industry and super funds themselves had emerged from being low-profile investment houses to become social vehicles, with attendant recognition and media profile, additional scrutiny and increased community expectations. More and more, both economic and social issues are being reflected in super. This emergence has been driven by diverse factors. Firstly, it’s simply as a result of the growth in funds under management: large pots of money attract attention. Secondly, it’s the impact of the financial crisis and negative returns. For many in the media, being able to link national and economic upheaval and share-market gyrations with the personal impact on super accounts was, and still is, an irresistible temptation.
The third factor is the slowburn, decade-long discussion about infrastructure backlogs and the need for accelerated national investment. While the focus has been on economic infrastructure, the debate is shifting to encompass social infrastructure needs and opportunities. The common factor has been ongoing calls and expectations that super funds will be able to step up and fill the funding gap. Lastly, it’s been the misrepresentation of superannuation in various political campaigns. Who can forget the “Mining Tax – Bad for Your Super” banners held up by Gina Rinehart and Twiggy Forrest in Perth last year, as the Rolex Revolutionaries demonstrated their previously unnoticed but fervent commitment to building security in retirement for millions of nonmillionaires. This theme was replicated and amplified in political and media circles as a further justification for retaining the status quo in regard to mineral super profits.