For many years I had recognised the need for independent, evidence-based and non-partisan research in superannuation and retirement policy, leading to the creation of The Conexus Institute, a not-for-profit think-tank philanthropically funded by Conexus Financial.
On its fifth birthday, the rationale behind its establishment is truer than ever. This important policy area has become not just a bone of contention between the two major parties in Australia but a political football being used to grandstand and score points against the other side.
The Coalition seems to be hellbent on undermining the principle of preservation by allowing people to draw on their retirement savings to buy a first home. And it is well-known in political circles that many Coalition MPs would love to go further and dismantle the compulsory super system – even though the opposition’s current super spokesman Luke Howarth denied as much at our Advice Policy Summit in Canberra last week.
Meanwhile, the Labor side of politics – with which, I have often publicly disclosed, I have some personal affinity – has been hesitant to embrace criticism of the system they created and unwilling to accept the reality that many industry super funds do not have sufficient operational infrastructure and processes to compete for customers as global financial institutions.
Outgoing Minister for Financial Services Stephen Jones and Treasurer Jim Chalmers deserve credit for announcing new mandatory service standards for the sector, buoyed by Conexus Financial research in collaboration with CoreData Research which found widespread poor member experience and retirement preparedness, especially in big profit-to-member mega-funds.
But it could be an example of too little, too late and a cynical view would be it was a band-aid solution to push the inconvenient topic off the front page before an election.
It’s not just political parties who engage in this game of political football. The industry associations in the sector smack of self-interest when they produce “research” concluding super for housing will be bad for consumers or – worse – push for a 15 per cent super guarantee rate.
A political threat
And, on the other side of the fence, right-wing think-tanks like the Institute of Public Affairs have been quick to provide “evidence” that the super system is not working for workers, when really they just see industry super’s success and public appeal as a political threat.
In light of this politically charged national conversation about super, the work of The Conexus Institute stands out. Over its five years in operation, it has been willing to take public positions that align with both major parties on different issues.
For example, it has been a critic of the Morrison government’s Your Future Your Super regime, and especially the annual performance test metrics, which it has argued create a range of unintended consequences.
But it has also broken ranks with many in the super industry and labour movement by not joining the consensus position that a 12 per cent SG (or higher) is in the public interest, instead pointing to academic evidence and the Retirement Income Review’s findings suggesting an SG of around 9 per cent may be sufficient (in line with some Coalition backbenchers).
And it has proposed pro-consumer regulations which may not fit neatly into either of the partisan worldviews on super, such as its bold proposal for a retirement licensing framework.
This role as independent researcher – backed by its unique mix of academic techniques with market experience and industry feedback – was a key reason for its establishment and on this front I think the institute has lived up to its mission statement. I would encourage the institute and its advisory board to continue to develop bold ideas that ruffle feathers both in the industry and in Canberra.
Improved outcomes for millions of workers
However, my ambition for the institute goes well beyond research to actual public policy that improves outcomes for millions of workers and retirees.
And on this bigger picture goal I think the conclusion would need to be that the institute is making a difference, but that much more needs to be done.
The “pulse check” by APRA and ASIC last year found some good progress by funds in meeting their Retirement Income Covenant obligations and helping members transition to retirement but it also found deficiencies also, confirming the Conexus Financial-CoreData research.
Pleasingly, the RIC was listed by many trustee board leaders at our recent Chair Forum on the Mornington Peninsula as their top regulatory priority.
The institute can claim some credit here by continually pushing funds to do more to innovate and produce world-class retirement outcomes.
Over my 38 years in publishing and events, I have learned that it takes persistence to keep some topics on the national news and policy agenda, especially where there are pockets of resistance.
As such, the institute has also developed good working relationships with the mainstream and industry press outside of the publications we own. This is an important proof point in the institute’s claim to independence from Conexus Financial.
Respected and constructive
Strangely for a think-tank (and especially one funded by an outspoken media company) its most important work may actually have happened in private rather than public. The institute has developed respectful and constructive relationships with industry executives, boards and the regulators, providing suggestions and workshops behind closed doors away from the heat of such a politically diabolical topic.
Its very topical work on liquidity governance for example found its way into the relevant APRA regulations. And there are known examples of changes in behaviour of funds that could be attributed to quiet nudges from the institute.
Both public and private advocacy – alongside trustworthy apolitical research – is required to fly the flag for a better retirement system for all. Onwards to the 10-year anniversary.
Colin Tate AM is founder and managing director of Conexus Financial and founder and patron of The Conexus Institute.
