What’s ahead for super?

7 min read
7 min read

At ASFA’s recent virtual briefing “The Future of Super” some of the industry’s leading experts shared their thoughts on the current pressing issues shaping super’s future. The briefing was facilitated by ASFA CEO, Martin Fahy, and included the following speakers:

  • Michael Rice, Executive Director, Rice Warner
  • Andrew Fraser, Chair, Sunsuper
  • Anne Ward, Chair, Colonial First State
  • Jeremy Cooper, Chairman Retirement Income, Challenger

Michael Rice, Executive Director, Rice Warner started the conversation by noting that the effect of the recent Early Release Scheme (ERS) has been profound. At the time of the event in late June, withdrawals from super were in line with Treasury’s expectations of around $27 billion, and haven’t caused significant liquidity problems for most funds. Rice did stress however, that some funds, with members working in the hardest hit industries such as retail and hospitality, have clearly been disproportionately affected.

Having said that, Rice stressed the longer-term impact of the ERS will be felt in several ways – because funds will have less cash to invest in assets at depressed prices, and because members are capitalising losses at a time when asset prices are low, thereby potentially significantly reducing their retirement balance. Also, members’ exiting their funds after withdrawals will lose their life insurance.

He also spoke of the negative effects of a what he described as a potentially watered down super system. “If, going forward, super’s objective is widened to allow for objectives other than income in retirement – for people to buy their first house, for example, or if early release on hardship grounds becomes a permanent feature – there’s no question there will be some loss of self-sufficiency in retirement,” he said. Particularly because typically those most impacted by early release schemes are those with less in super – with the inevitable result that by offering help to those in need, we are in fact increasing inequality.

According to Andrew Fraser, Chairman of Sunsuper, the only sure thing about scenario planning for the future is that you are likely to be wrong as much as you are right. What he did say was this: “Our ultimate aim should be a system with both universality and compulsion at its core. That’s the only way to get the best possible outcomes for Australians in a generational sense. If you deplete the super system to serve other needs, you increase the fiscal pressure on the Government, and risk outcomes. The real difficulty lies in the notion that using super for other purposes is somehow costless. But it isn’t.

‘If we are interested in outcomes – then many Australians will be materially and meaningfully worse off by removing $10,000 or $20,000 from their super now, but it’s a problem which will be crystallised down the road. Having said that, if $40 billion is removed from a system with $2.7 trillion in assets, is that really a big deal?”

Looking out to 2025, Fraser was asked whether alternatives will play a bigger role. He said that we have created a good system which has the means to offer patient capital necessary to Australia’s economic growth, and that we shouldn’t discount this to pursue other objectives.

Anne Ward, Chairman of Colonial First State started by making a few predictions. In her view we will see fewer funds driven by consolidation, bigger funds driven by the need to achieve scale benefits and more efficient operations, as well as some form of the best in show ranking system. She believes the future will hold a more diversified value proposition and greater choice, which will be driven by heightened member expectations. Her hope is that larger funds will in fact be better at mass customisation than smaller funds, and drive innovation, rather than the opposite.

“The industry trend towards consolidation has been gathering steam for some time, but we’ve seen a rapid acceleration due to COVID-19. The ERS has had a profound effect –it’s helped Australians in hardship, but it’s also awakened many members to the fact that their super is real dollars, and it does belong to them,” she said. Ward’s hope is that this will lead to greater member engagement.

Looking ahead, Ward spoke of the emergence of the ‘megafund’ with a handful of funds managing in excess of $200 billion. She thought megafund scale will be needed to deliver the operational efficiencies required to deliver the enhanced member outcomes and service that members will demand post-COVID.

Ward also thought the funds that help members to access the financial advice they need, when they need it, will have the advantage.

Jeremy Cooper, Chairman, Retirement Income, Challenger started by saying that what really needs to be cleared up is the conflation of the worthy concept of choice, and the ability to change your mind immediately – both between funds and between investment options. “This is problematic. Large funds are harvesting the illiquidity premium to the benefit of their members, but if members can exit at a time of crisis, without advice, it’s harmful to the remaining investors, and harmful to the investment returns of the fund. I think people should have to pay for this choice – we should be more explicit about the cost of doing this,” he said.

On the topic of early release, Cooper said that as a “retirement income purist” it doesn’t fit with beliefs, but what’s interesting is the sheer number of people who took this option – more than two million at 24 June.

“This is a serious policy question. If every time there is a market correction there’s an expectation of early withdrawal, is that really what we want?” he asked.

To avoid a future ERS scenario happening again, he even suggested in the future there might need to be a ‘side car savings account’ system where members save money outside of super with a trusted provider, to put aside funds in case of future emergencies.

Jeremy Cooper then brought up the thorny issue of advice and said there is so much coming down the line it’s hard to see where we will land, or what the answer is. “I still don’t think we have a fit for purpose model, given the origins of the current model in a bank dominated, vertically integrated landscape,” he said.

Some of the questions posed related to the way people view their super. Anne Ward spoke of the need to encourage Australians to commit voluntarily to super, rather than seeing it as a grudge purchase and said funds should ‘earn their customers’ rather than relying on default flows.

Jeremy Cooper asked what we can do to encourage Australians in retirement with larger super balances to safely spend reasonable amounts of their capital each year, rather than looking at their super fund balance as capital which needs to be maintained. He said the wealth management industry is not encouraging or incentivising people to spend in their accumulated super in retirement.

Finally, panellists were asked whether a tax on superannuation would form part of the Government’s budget repair plan. Michael Rice said he did not believe a tax on contributions would be raised—given we already have the Division 293 legislation which taxes higher income earners on their contributions—but did say a tax on fund earnings could be an alternative, particularly because in his view, many members wouldn’t notice such a tax, and that this would make it appealing to the Government.

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Carmen Beverley-Smith

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

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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

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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

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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.