In 2022 the compulsory superannuation system turns 30. Super has created a highly competitive industry of asset owners, investment managers, insurers, service providers and advisers. Millions of Australians can look forward to a better retirement due to Australia’s world-class superannuation system.
At short notice, super showed its agility in supporting almost 1.7 million applicants to the emergency early release scheme. While this may be a once-in-a-century crisis, the ability of the superannuation system to bail out members at this crucial time underscores the need to ensure its sustainability.
However, we need to be careful in not expecting too much from superannuation. Already its parameters are broad; a 30+ year retirement plan that invests in nation-building long-term assets, while also a home deposit scheme and an emergency ATM.
Over the years the political and media commentary around the purpose of super has been muddled, to say the least. This purpose needs to be settled to guide our nation’s political and super industry leaders. We need to build resilient solutions beyond raiding members’ retirement savings.
Agreement on the purpose of super will need to honour the social contract where society gives up today’s tax to subsidise individuals saving for their future retirement. Ultimately, a competitive and cost effective super system will take the pressure off the age pension.
Super as a national institution
It is time to see ourselves as ‘guardians’ of superannuation and to become far more vocal in the advocacy of our member’s interests. Who gets a better hearing in Canberra – the banks, big business, miners or super? It is superannuation that will make the biggest impact on the long-term welfare of Australians.
We take pride in our strong national institutions such as Medicare. With the right leadership, we can build super into a national icon. We have shown we will fight back if Medicare is tampered with, and superannuation deserves the same level of public affection.
If we want superannuation to achieve its full potential then we need to end the tiresome industry tribal feuds and find our collective voice: a united association with a single purpose to improve member benefits. As we see super funds merge can associations remain immune? We need to see that we have more that unites us than divides us. This may be hard but that just means the rewards will be greater.
One association will accelerate improvements so that super can proudly not only meet but exceed community expectations. We can start by extending the superannuation guarantee to the 1 million+ Australians not covered, negotiation of streamlined regulations that deliver optimal net member outcomes, and ongoing system cost improvements. That sounds like a national institution we can all proudly stand up for.
As the first generation of super guardians, while we can be proud of building a world-class super system let’s not be left asking: “what else could we have done?”
To listen to the related interview with Michael Swinsburg on the Market Narratives podcast click above or find the series on Apple Podcasts, Google Podcasts or Spotify.
Michael Swinsburg is a Managing Partner of Alexander Hughes in Australia based in Sydney, member of the Management Committee and Head of the Asia Pacific region
Having been involved in the Super Industry when SG was introduced, I agree with Michael that super is a social contract to fund retirement. It’s introduction heralded a great platform for many to save for retirement when it was previously only available to award employees and senior executives. However, it has become a political football. One that is tinkered with (rules changed) too often.
In my view we need to:
1. remove complexity / keep it simple;
2. increase member engagement – promote super’s value, set expectations and ensure members understand it (admittedly it is difficult to get those starting work to be interested in their accounts that they’ll not have access to for 40-50 years). Ongoing education remains critically important as US 401k plans showed us when member choice was introduced.
3. stop politicians seeing it as a pot of gold they can tinker with (the only thing more certain than death and taxes is changes to super!)
4. improve cost efficiencies another element of member’s seeing value of super
5. ensure a strong, united voice represents all super funds, after all those funds have the same purpose – managing members retirement savings.