Public policy diagnostics

4 min read
4 min read

You wouldn’t want to be a patient in a public health system that used diagnostic tools of the timeliness and quality used by some of the commentators in public policy debate about superannuation.

Prescriptions and excisions recommended by supposed expert public policy practitioners or some journalists are often based on rather dodgy interpretations of dated data.

If a similar approach was taken in the medical profession, then treatment plans would make use of x-rays taken two years ago of someone who may or may not be the patient in question. Operations undertaken would often involve attempting to take out an organ previously removed or treated.

A case in point relates to analysis by several commentators regarding the number of multiple and unnecessary superannuation accounts in the system and the associated administration fees and insurance premiums charged. The release each year of data on account numbers by the Australian Taxation Office generally stimulates such commentary.

Some analysts start with a very mistaken estimate of the number of accounts needed in the system. They basically assume that it is only the 10 million or so people in the paid labour force that need a superannuation account. This ignores those that have retired and those who have not yet reached preservation age but are not currently in employment. The actual number of people with superannuation is 16.1 million.

This figure gets compared to the APRA data on the number of accounts in the superannuation system.

There were around 28 million accounts in total in June 2018 with 14 million accounts with insurance cover at that date. However, both numbers are now well down on those levels due to the impact of the Protecting Your Super (PYS) and Putting Members’ Interests First (PMIF) legislation. This is generally ignored by a number of the critics of the superannuation system.

The number of accounts in the system fell by around 3 million in October 2019. A further fall in account numbers of around 2 million can be expected in the next year or so as additional accounts in Eligible Rollover Funds move first to the ATO and then to active accounts of individuals.

The number of accounts with insurance cover has also fallen substantially in recent months with ASFA analysis indicating that the PYS provisions have resulted in around 2.5 million fewer accounts with insurance cover. The PMIF legislation could initially lead to a further 1.6 million accounts no longer having insurance cover with this number growing to 2.3 million over time.

All these measures impact primarily on inactive and/or low balance accounts, thereby addressing some criticisms about account balances being unduly eroded by fees and insurance premiums.

ASIC has also engaged in analysis of their preview position regarding the consideration of TPD insurance claims Report 633 Holes in the safety net: A review of TPD insurance claims.

In the past there have clearly been problems with how insurance claims were assessed and processed. There also were issues in some cases with definitions and product design. However, much has changed since 2016-17, which is the period covered by most of the data in the ASIC report.

Since then there has been the introduction of the Insurance in Superannuation Code of Practice and the Life Insurance Code of Practice. There also have been changes in insurer practices (including changes to definitions of disability) following the hearings and report of the Financial Services Royal Commission.

Survey data compiled by the Financial Services Council for 2018 tell a very different story to the experience in 2016-17 which has been detailed by ASIC. Data to the end of 2018 shows 88 per cent of TPD claims were paid in the first instance, with an even higher figure of 91 per cent for mental health TPD claims. This includes claims against all definitions, including activities of daily living (ADLs).

Also, the PYS and PMIF measures have led to the cessation of insurance cover for many individuals who are not currently in the paid labour force. This means there will be even less reliance on activities of daily living in establishing TPD, down from the very low current rate for this definition being applied of around 3 per cent of claims.

The superannuation sector is not without its faults, even after the many recent policy changes. However, diagnosis and treatment plans should be based on where the system is now, rather than how it was a few years ago. Australia has a world class retirement income system and its strengths should be built upon rather being the subject of unfair and outdated criticisms.

Picture of By Ross Clare

By Ross Clare

director of research

More Reading

Q&A with IFM Investors’ David Whiteley
In-Depth In-Depth

Q&A with IFM Investors’ David Whiteley

Super system can turbocharge productivity on road to net zero
In-Depth In-Depth

Super system can turbocharge productivity on road to net zero

Understanding the Division 296 super tax
In-Depth In-Depth

Understanding the Division 296 super tax

Derek Thompson

Via live link

Best Selling Author, Podcast Host of 'Plain English'

Sessions

Keynote 8 – Navigating the energy transition: opportunities, investor strategies and policy needs

Few speakers can match Derek Thompson‘s ability to synthesize mega-trends in society, labor, economics, technology, and politics. Put another way: Derek trawls the data sets and does the forecasting and deep reporting necessary to help us better understand how we live, how we vote, how we spend, and how we work.

In his paradigm-shifting #1 New York Times bestseller, Abundance (co-written with Ezra Klein), this award-winning journalist reveals how our policies and culture have pushed us into a world of scarcity (not enough housing, workers, or progress)—and offers a radical new path towards a world where housing is affordable, energy is plentiful, and innovation flourishes across industries.

He shares a compelling vision of a future where we have more than enough for everybody, and a practical, actionable roadmap for how to get there. It starts with taking more risks, building more expansively, and recognizing that we all have the power to create a world of abundance. “Everything’s utopian until it’s reality,” he says.

Carmen Beverley-Smith

Executive Director - Superannuation, Life & Private Health Insurance, APRA

Sessions

Keynote 8 – Navigating the energy transition: opportunities, investor strategies and policy needs

Carmen joined APRA in March 2023 and holds the role of Executive Director, Life and Private Health Insurance and Superannuation.  

She has had an esteemed career in financial services, spanning over 25 years. She has held diverse leadership roles at Westpac and Commonwealth Bank of Australia, including across risk, transformation and change, product and portfolio development, and sales and service. 

Prior to joining APRA, she held the role of General Manager, Risk Transformation Delivery Integration at Westpac. This involved leading the group-wide implementation of a suite of solutions to uplift risk management capability and develop data, analytics and reporting. 

Carmen leads with a values-driven approach and a particular interest in developing and mentoring talent. 

She holds a Bachelor of Commerce and Accounting, is a certified Chartered Accountant and a Graduate of the Australian Institute of Company Directors. 

Amy C. Edmondson

Novartis Professor of Leadership and Management, Harvard Business School

Sessions

Keynote 8 – Navigating the energy transition: opportunities, investor strategies and policy needs

Amy C. Edmondson is the Novartis Professor of Leadership and Management at the Harvard Business School, a chair established to support the study of human interactions that lead to the creation of successful enterprises that contribute to the betterment of society.

Edmondson has been recognized by the biannual Thinkers50 global ranking of management thinkers since 2011, and most recently was ranked #1 in 2021 and 2023; she also received that organization’s Breakthrough Idea Award in 2019, and Talent Award in 2017.  She studies teaming, psychological safety, and organisational learning, and her articles have been published in numerous academic and management outlets, including Administrative Science Quarterly, Academy of Management Journal, Harvard Business Review and California Management Review. Her 2019 book, The Fearless Organization: Creating Psychological Safety in the Workplace for Learning, Innovation and Growth (Wiley), has been translated into 15 languages. Her prior books – Teaming: How organizations learn, innovate and compete in the knowledge economy (Jossey-Bass, 2012), Teaming to Innovate (Jossey-Bass, 2013) and Extreme Teaming (Emerald, 2017) – explore teamwork in dynamic organisational environments. In Building the future: Big teaming for audacious innovation (Berrett-Koehler, 2016), she examines the challenges and opportunities of teaming across industries to build smart cities. 

Edmondson’s latest book, Right Kind of Wrong (Atria), builds on her prior work on psychological safety and teaming to provide a framework for thinking about, discussing, and practicing the science of failing well. First published in the US and the UK in September, 2023, the book is due to be translated into 24 additional languages, and was selected for the Financial Times and Schroders Best Business Book of the Year award.

Before her academic career, she was Director of Research at Pecos River Learning Centers, where she worked on transformational change in large companies. In the early 1980s, she worked as Chief Engineer for architect/inventor Buckminster Fuller, and her book A Fuller Explanation: The Synergetic Geometry of R. Buckminster Fuller (Birkauser Boston, 1987) clarifies Fuller’s mathematical contributions for a non-technical audience. Edmondson received her PhD in organisational behavior, AM in psychology, and AB in engineering and design from Harvard University.

 

Daniel Mulino MP

Assistant Treasurer and Minister for Financial Services

Sessions

Keynote 8 – Navigating the energy transition: opportunities, investor strategies and policy needs

Born in Brindisi, Italy, Daniel was a young child when he moved with his family to Australia. He grew up in Canberra and completed his first degrees – arts and law – at the ANU. He then completed a Master of Economics (University of Sydney) and a PhD in economics from Yale.

He lectured at Monash University, was an economic adviser in the Gillard government and was a Victorian MP from 2014 to 2018. As Parliamentary Secretary to the Treasurer of Victoria, Daniel helped deliver major infrastructure projects and developed innovative financing structures for community projects.

In 2018 he was preselected for the new federal seat of Fraser and became its first MP at the 2019 election, re-elected in 2022 and 2025. From 2022 to 2025, Daniel was chair of the House of Representatives’ Standing Economics Committee in which he chaired inquiries; economic dynamism, competition and business formation and insurers’ responses to 2022 major floods claims.

In 2025, he became the Assistant Treasurer and Minister for Financial Services.

In August 2022, Daniel published ‘Safety Net: The Future of Welfare in Australia’, which aims to explore the ways in which an insurance approach can improve the effectiveness of government service delivery.