Australia has developed a $4.1 trillion superannuation system, but the fact that it does not provide even basic information for consumers to compare retirement options is a source of embarrassment. Consumer-focused transparency is vital and should be prioritised so that future generations of retirees have access to free, reliable and easy to use information.
Dollars and cents are only one aspect of retirement, which for most fund members is simply the start of a new phase of life, not the end of it. Super funds need to extend their expertise beyond supporting members in accumulation to help them enjoy secure and meaningful retirements.
CalPERS CIO Stephen Gilmore says he can add 50 to 60 basis points to returns by using a total portfolio approach, and believes that it can also simplify accountability and open up new opportunities for investments at the US’ largest pension fund.
A balanced portfolio currently has 5 per cent sitting in cash which the client wants deployed to either equities or credit. That was the hypothetical scenario presented to the Professional Planner Researcher Forum and four asset managers had to make their case.
The promise of AI is immense, but its realised benefits continue to lag. One area where it is having a notable impact is on supporting super funds to co-create software and applications that deliver better member experience and can be updated and iterated regularly.
Senior superannuation fund executives must learn how to separate the artificial intelligence reality from the hype that currently surrounds it, or else run the risk of investing in projects that don’t achieve the desired results. A good starting place is to recognise along with any claimed benefits, there will inevitably be challenges in implementation and executives need to be wary of advice that communicates only upside.
That HESTA could have done a better job on its admin transfer is not in doubt. But at a time when regulators are piling on the pressure for funds to improve their operational and member-facing infrastructure, APRA’s reaction is counterproductive.
Bitcoin and the technologies that underpin it could disrupt the entire finance industry, and it’s “beholden upon everyone” to learn about them even as they make up their own minds about what to do with them, according to a panel at the Professional Planner Researcher Forum.
The government will introduce a cooling-off period for consumers switching super funds, limit “inappropriate” financial advice fee charging and make changes to anti-hawking laws in a win for profit-to-member super funds. But they will also have to contribute to the Compensation Scheme of Last Resort.
The government’s package of consumer protection reforms are well intentioned and address issues that led to losses in the First Guardian and Shield managed investment schemes. But there are some thorny questions that need to be answered before a so-called “waiting period” for fund switching can be said to be in members’ best interests.
The spectre of a standalone regulator for the superannuation sector has been kept at bay partly through increased collaboration and alignment between the Australian Securities and Investments Commission and Australian Prudential Regulation Authority, especially on the Retirement Income Covenant. But shifting deckchairs at the two agencies, and the increasing systemic importance of the super sector, make the “twin peaks” project a perennial work in progress.
The legislated purpose of superannuation is to deliver income for a dignified retirement and under the Retirement Income Covenant trustees are required to support all members approaching or in retirement, regardless of account balance, engagement with super or access to advice. Most trustees would admit there is still work to be done, and APRA will continue to push funds to do better.
The investment intelligence behind Australia’s largest asset owners and their teams
In-depth interviews with leaders, experts and visionaries in the institutional investment community
Updates on the latest industry policy developments and regulation
The challenges and innovations of custody, technology and operational due diligence
Investment Magazine provides in-depth, monthly analysis of trends and developments for all the businesses in which superannuation funds engage‚ including asset allocation, investment manager selection, custody and fund accounting, member administration, group insurance and compliance.
We acknowledge the Traditional Custodians of this land upon which Conexus Financial sits, the Cadigal of the Eora Nation. We recognise their continuing connection and unique cultural and spiritual relationships to the land, waters and community. We pay our deepest respects to them and their culture, and to Elders both past and present.
