Minister for Financial Services Stephen Jones has told the Retirement Conference in Canberra today that he will introduce draft legislation to enshrine the purpose of superannuation within months.
“We have proposed that the objective of superannuation is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way,” Jones told the conference, jointly hosted by Conexus Financial and the Conexus Institute at Old Parliament House on Tuesday.
“In coming months, we will release draft legislation for consultation before introducing it to parliament soon after.”
The revelation of the legislative timeline for the objective comes as the government warns super funds to improve member experience and lift customer service standards. It has signalled the issue as a policy priority following a damning report by regulators ASIC and APRA and a rise in superannuation-related complaints to AFCA.
Enshrining a purpose for the system will provide government the impetus to crack down on “underperformance” on customer service, Jones said. But he added funds should not wait for legislation to begin improving member experience, especially on helping them prepare for retirement.
“There is an opportunity for funds to be more innovative around what products they offer their members in the retirement phase,” he said. “This is not something they need to wait for government’s imprimatur on. This is something that they can and should be doing as they serve their members.”
He said the government expected funds to provide advice on their members’ retirement, indicating it will be difficult for them to meet their obligations under the covenant without offering forms of advice. That thinking underlies the government’s response to the Quality of Advice Review, he said, arguing it “makes sense” for funds to give more advice, albeit “safely”.
Jones said the Your Future Your Super performance test will be extended to so-called choice products later this month. “The extension of the performance test into the choice sector will scrutinise around 1000 additional products, representing over $350 billion in assets,” he said.
But he said the government was open to making some changes to the methodology of the performance test, describing it as an “effective but blunt tool”.
The campaign to legislate the purpose was kicked off at the Conexus Financial Political Series breakfast with Treasurer Jim Chalmers in February.
The comments come ahead of the next installment of the Conexus Financial Political Series in Melbourne on Monday 28 August, at which Shadow Treasurer Angus Taylor and Shadow Finance Minister Jane Hume will lay out the Opposition’s response to the government’s financial services agenda.