The Retirement Reporting Framework has the potential to further drive the super industry forward on the path to implementing quality retirement income strategies (RIS) for their members. To achieve this potential, Treasury should focus on the level that the industry needs to reach in the future, and maximise the opportunity afforded by the “what gets measured gets managed” mantra.

“Stretch” and “signal direction” should be the two objectives of the framework, on which Treasury took submissions on 5 September. (Ours can be found here.)

Our concern is that the metrics and indicators proposed in the discussion paper are driven by what is possible to deliver now, and not the data that super funds should be collecting to monitor the progress of their RIS going forward. Upping the ante will motivate industry uplift.

Treasury’s suite of initiatives showing promise

In November 2024, Treasurer Jim Chalmers announced a reform package designed to improve the retirement phase of super containing four elements:

1. Revamp the existing innovative income stream regulations
2. Expand resources on the Moneysmart website
3. Introduce a set of voluntary best practice principles (BPP) to work in conjunction with the Retirement Income Covenant (RIC)
4. New transparency framework, named the Retirement Reporting Framework, which will commence from 2027

We were initially sceptical about the potential impact of these reforms but have since become more positive. Our initial scepticism was because we felt more substantial change was necessary to accelerate a sector that needs to move faster.

We like the direction in which the BPP is travelling. We think the consultation paper is very good, with only minor quibbles. It provides detail that complements the principles-based RIC and moves the system toward a clearer statement of what “good” looks like. We would like to see all fund trustees compare their existing RIS against the BPP.

Encouragingly, we have already heard anecdotes from funds suggesting that the BPP could become a pseudo type of minimum standards. Some people are saying that business cases have higher potential to be approved if they are linked to a best practice principle.

We believe the RRF has similar potential.

Maximising opportunity of the RRF

A few things need to happen to maximise the potential of the RRF. Most importantly, Treasury should focus on using the RRF to push the industry forward rather than attempting to create direct-to-consumer benefits from more disclosure. We contest whether any meaningful consumer benefits will be realised from complex information that few members will use. The RRF should be viewed as a policy measure that is directed at industry, with the primary users likely to be super funds, policymakers, regulators, researchers, consultants and perhaps media.

Furthermore, the lens through which metrics and indicators are determined should not be what the industry can currently deliver, but rather the data that funds should be collecting to gauge the progress of their own RIS. Every reporting requirement should be framed through the lens of “should a fund with a good RIS and outcomes assessment framework be able to report on this aspect?”

Treasury can also lean into the BPP by asking “what features of the BPP and associated member activities, member outcomes and capabilities required to deliver those outcomes, should be measurable?”

The RRF design also needs to project ahead to the targeted standard of RIS the industry needs to deliver in 2027 and beyond, that is, after reporting is required. Asking funds to deliver data they should be collecting anyway within a couple of years will not impose undue cost or burden, and will provide an uplift by requiring funds to build out their systems.

The way we read the proposed RRF is that it is steeped in the present state. Unfortunately, the present state is that every fund needs to advance further and laggards exist. Requiring reporting on what is (and needs to be) an interim state will not maximise benefit.

‘Uncomfortable’ is necessary on the journey to quality

Arguably we have reached the point where creating some discomfort for super funds is necessary to nudge progress. ASIC Commissioner Simone Constant stated that “we can’t wait years to get this right”. We share the sentiment. In this case, discomfort means setting RIS standards that are appropriate for industry to reach in two to three years.

Beneficial effects should flow-down from funds creating the necessary measurement systems and publicly reporting the outputs. These include setting in place the underpinnings of assessment frameworks and motivating funds to improve their RIS under the public glare, leading to better member outcomes.

We encourage Treasury to maximise the ‘stretch plus signal direction’ opportunity that is available. For an industry that isn’t moving fast enough with significant laggards, every policy initiative should maximise the nudge to improve.

David Bell is executive director of The Conexus Institute.
Geoff Warren is research fellow at The Conexus Institute.

The Conexus Institute is a not-for-profit think-tank philanthropically funded by Conexus Fiancial, publisher of Retirement Magazine.