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We meet again today on the lands of the Gadigal People, yesterday we enjoyed a really powerful welcome to country from Cr Aunty Yvonne Weldon reminding us of the importance of such acknowledgements and the power of the sector to advance reconciliation and bring equitable outcomes. I pay my respects to their Elders, past and present. And extend that respect to any First Nations Peoples that may be in the room with us today.
We welcome The Treasurer’s announcement today and we feel the proposed reforms represent a step forward in ensuring Australians not only save for retirement but also have access to the tools and products they need to make the most of their super.
As your association we look forward to working with government to ensure the proposals are functional and that they make a difference to members’ outcomes.
ASFA has been the voice of super, your peak association for 62 years. I am very proud to be able to lead this organisation that plays such a key role to bring you insight, research, professional development and to be your advocates, with policy makers and with regulators when changes are proposed, and to lead and coordinate efforts for you when you as a sector identify that changes are required.
That’s how, nearly a year ago now we came to work on the uplift required in death benefit payment processes. You identified using the data points that you have and seeing the rising consumer sentiment determined that you would focus on improvements. We were please to lead this work and to release a common set of standards on death benefit payments this September. These standards represent a change in process that I am confident will deliver better outcomes for those who have lost a loved one.
This work is crucial. We know we can do better. We’re on it.
As you know, the payment of death benefits is never straight-forward. Without delving too much into the technical detail, you all know this often involves multiple parties, two decisions, contested positions and inconsistent state and territory laws. Executing your role as trustees is the paramount objective.
You must find the balance between speed and accuracy, we know we can do a better job of explaining this to members, we can do a better job of helping beneficiaries and we can work towards policy settings conducive to the uplift.
This work is necessary but it is complicated and it takes time.
That’s why we shouldn’t distracted by sensationalist headlines because it’s unfair to suggest, as recent press would have us believe, that improving the death benefit process has not been the focus of our collective efforts.
We welcome scrutiny and regulatory efforts to assist us in improving outcomes for members, but let’s guard against unnecessarily undermining faith in superannuation system, which as we know consistently delivers every day for millions of Australians.
I particularly welcome the Treasurer’s announcement for an improved ASIC Moneysmart website to help educate Australians about how to best build dignity in retirement with super and what to expect of funds, and other parties like insurers. Funds have really done a lot of heavy lifting through efforts like broad marketing campaigns through to targeted member sessions educating members on the operation of super, there is a broader role for ASIC to play, this can help to accurately set community expectations on complex matters such as death benefit payments.
We look forward to this collaborative effort between ASIC and the funds to help Australians feel confident. We know our job is to execute the improvements we have identified because the work will deliver results and we know Australians deserve these improvements.
There is an enormous amount of work you all do everyday so very well.
There are over 22 million member accounts that you all collectively look after. In any year you will answer well over 5 million phone calls from your members, answer over 1.7 million emails, process over 500,000 investment switches, convert nearly 167,000 accumulation accounts to pension phase, process nearly 50,000 insurance claims and so on and so on.
And you build wealth for the masses. The average 10-year return for a default MySuper product is 7.3%. Many funds have produced higher. Australian retirees are enjoying a greater standard of living than their parents, and this will only improve.
Superannuation is saving the federal budget $20 billion a year in age pension payments, and this will increase to $30 billion a year in real terms.
And then there are less quoted benefits, think of the efficient creation of wealth for those previously not served by standard solutions
The economy-wide stabilisaton effects as funds provide patient capital to act as a ballast in stormy waters lending or investing where others may not.
This capital is most often equity capital, providing a different solution than debt funding arrangements.
And like attracts like. Our well-established institutional investor network in Australia is the subject of most of my incoming international calls because other nations know that local strength attracts large like-minded foreign public funds, and that’s the way we fund our national ambitions. This is a blue-chip stamp to attract more capital.
While we acknowledge the very real improvements to be made, today we are pleased to release the findings of research we conducted looking into how Australians feel about their superannuation.
It’s really good news.
Of the fifteen hundred statistically representative people sampled, nearly two-thirds of people rated the investment performance of their fund as either ‘very good’ or ‘good’. Only 6% rated their fund’s performance as ‘poor’ or ‘very poor’.
We asked the respondents how they view their superannuation.
Around 70% viewed it as either ‘a nest egg to funds a comfortable retirement’ or a ‘means to prevent reliance on the Age Pension’ .
Only 4% of respondents would prefer to have their super savings for personal use.
This research clearly shows Australians are happy with how their superannuation fund is performing, and support its key role in providing for their retirement.
There are people in this room, people in our sector who forged the current system. As a nation we owe them a debt of gratitude.
We also owe them, and every Australian, our collective effort as current guardians of the system to go beyond protection of what has been built – to enhance this incredible system. To fulfil the promise.
Superannuation is the critical, universal pillar in our retirement income system – delivering annual retirement benefits that are double those of the Age Pension ($109.6 billion v $54.7 billion, according to APRA).
The Intergenerational Report notes that by 2035, Australia will have the lowest public spending on the Age Pension by GDP of all 38 advanced economies in the OECD.
This is our day to day work, and while we keep a clear set of eyes here we also lift our gaze to the horizon. Those of you who forged this system didn’t do so by standing still, and so with your guidance what does the next generation of guardians of the system do to build on your legacy?
Today, ASFA calls on the next Federal Government to develop a National Retirement Income Strategy, which considers how the three pillars of retirement income – superannuation, the age pension and private savings – interact.
National strategic plans are comprehensive documents developed by governments to outline the vision, long-term goals and priorities for addressing critical issues affecting our nation.
They have played a critical role in co-ordinating progress on disability, homelessness and ageing, and the time is right to bring this type of planning to our retirement income system.
With a shift to more people living longer in retirement, and a reduced working age population, ASFA is calling for a government-led process which would convene a broad range of stakeholders, to set a long-term vision for what life after work might look like.
Importantly, this will help to ground your work, and the reforms announced this morning, on improving retirement. The retirement income covenant work, so crucial to turning our collective minds to the outflow for Australians, needs to be placed in a national framework, a true strategic vision for life after work.
The time is right to bring down the silos around the retirement pillars, and align with major areas of social policy including healthcare, aged care and housing, recognising their impact on the adequacy of retirement incomes.
Thank you and join us for another jam-packed schedule we have for you today. Let’s begin …
Mary Delahunty, ASFA CEO
