The new financial year and new term of government mark a critical juncture for the superannuation industry.
The re-elected Coalition Government will undoubtedly revisit its legislative agenda from the previous term, and will work through the recommendations of the Hayne Royal Commission and the Productivity Commission’s review into the superannuation system.
Already, Treasurer Josh Frydenberg has flagged a review into the retirement income system.
Reform is most definitely in the air – but it’s important that any reforms focus on improving the system, rather than instituting wholesale change.
There’s no doubt super will work better for everyone if we reduce unintended multiple accounts, remove underperforming funds, and continue to ensure that members’ insurance is providing great value.
However, we mustn’t lose sight of the fact that superannuation is broadly working well. It’s helping Australians prepare for retirement and protecting them and their families with valuable insurance. Constant tinkering also confuses people, so it’s important that we get any changes right the first time and then allow them to take effect and build some stability in the system.
Rest is determined to play a key role in shaping these reforms so they result in the best possible outcome for our members, and all Australians.
We support measures to reduce multiple super accounts and believe APRA’s strengthened powers will greatly assist in driving this outcome. We have already flagged our in-principle support for the Royal Commission recommendation that new members only default into an account once – otherwise known as ‘stapling’.
We also strongly believe the current system of attaching default funds to modern awards allows funds to design products, services and investment strategies relevant to their members’ needs. But the performance criteria used to review these default funds should be strengthened to remove underperformers.
Rest has long maintained that automatic group insurance is a fundamental part of superannuation. The Protecting Your Super legislation passed in the last term of government is now in effect, and members whose accounts have been active for 16 months or more will now have their insurance switched off unless they opt in.
In the past few months, we have contacted the members affected by this legislation to inform them of the changes and give them the option to retain their insurance. It’s been really pleasing that we’ve helped tens of thousands of members take action and opt in to their insurance before it was switched off.
Many of our members would be unable to access or afford life insurance if it wasn’t provided to them through their superannuation account. We are determined to ensure their insurance protection is maintained, and balance erosion is instead addressed through better product design.
Rest is committed to working constructively with government, regulators and the industry to advocate for our member’s long-term interests.
We look forward to working with Senator Jane Hume, the new Assistant Minister for Superannuation, Financial Services and Financial Technology. It’s pleasing that the minister charged with leading these reforms has such a strong background in financial services and superannuation. We congratulate her on her appointment.
We also congratulate the Labor MP Stephen Jones on his appointment as the Shadow Assistant Minister for Financial Services, and look forward to working with him on improving the super system.