The reliability of super funds’ status as the so-called shadow banks in the Australian economy has been called into question. New research from the Conexus Institute found that as funds’ appetite for certain asset classes, such as private debt, rise and fall in different stages of the investment cycle it could create a “feast or famine” for business sectors relying on them as a funding source.
The Reserve Bank of Australia has told super funds to step up their own risk management practices especially given their increasingly large footprint in the Australian financial system. Speaking at the Investment Magazine Chair Forum on Thursday, assistant governor of financial system group, Brad Jones, said the RBA will not always be there to cushion shocks should a liquidity crisis occur.
Outgoing Minister for Financial Services Stephen Jones rejected suggestions he had given ammo to super sector enemies in his polarising tenure, saying it’s possible to “love something” but criticise it at the same time. The MP for NSW south coast seat of Whitlam announced his shock retirement from politics on Thursday.
For Chris Artis, chief investment officer of the $1.1 billion Meat Industry Employees Super Fund (MIESF), the fact the fund passed the 2024 Your Future Your Super test with flying colours is proof that even very small funds have a legitimate place in the superannuation landscape. Artis says the fund is in a “luxurious position” under the test, and he’s a critic of those that hug a benchmark to ensure survival.
Consumer advocates have criticised the latest research from Super Members Council on how retirees can better access the tax benefit of pension phase, calling out that the minimum balance requirement imposed by some SMC member funds means it is “literally impossible” for poorer retirees to even access account-based pension. Super Consumers Australia CEO Xavier O’Halloran said super funds only need to “look into the mirror” if they really want to move the dial on this issue.
A retirement licensing regime would ensure a system of fit-for-purpose funds motivated to meet their obligations under the Retirement Income Covenant. Policymakers, regulators and those funds leading the way on retirement must think at a system level by considering what happens to members of those funds that are lagging.
By comprehensively reviewing the existing universe of retirement income solutions and analysing the trade‑offs inherent in various product designs, we were able to identify five key attributes that are specific, mutually exclusive, exhaustive and that we believe fully characterise the in‑retirement experience.
The challenge created by the Retirement Income Covenant invites a reconsideration of the existing conventions of superannuation fund governance. Trustees need governance arrangements that support them in discerning retiring members’ interests, balancing them and remaining loyal to them, while regulators could acknowledge some problems are better addressed collectively.
The Albanese government has launched a pre-election crackdown on poor member services in the super sector, especially delays in processing death benefit and insurance claims, as it looks to introduce new “mandatory and enforceable” industry standards. The rules, which followed regulatory enforcement action against Cbus and AustralianSuper’s self-initiated claims compensation scheme, was described by consumer advocates as a “massive win”.
Superannuation funds should welcome the introduction of the new Financial Accountability Regime (FAR) in March as a chance to embed a culture of accountability through their organisations. Communicating the benefits throughout the organisation is key to avoid creating a climate of fear as the new rules come in.
Insignia Financial has promoted Damien O’Donnell to chief technology officer.
The Financial Accountability Regime for super fund executives kicks off in mid-March, and despite suggestions it is too onerous or could deter people wanting to work in the sector, ASIC Commissioner Kate O’Rourke tells Investment Magazine super funds have had plenty of time to get ready. She says funds have had a good chance to see how it works in the banking sector and should be ready to comply from day one.
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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.
