Wrapping up last week’s ASFA 2016 conference saw Financial Services Minister, Kelly O’Dwyer, address an audience that had experienced two solid days of considering whether the super industry in fact did ‘measure up’. For many of us that attended this year’s conference was a departure from the review of where we were heading and instead reminded us that we are part of a larger industry and economy, with some very large responsibilities to the end member – from both a fiduciary and also quality of life perspective.
The Minister outlined the goals to modernise our retirement income system, particularly superannuation, ‘making sure it works for everyone’. The government’s own superannuation reform package had been introduced to Parliament less than 48 hours before her address, focusing on delivering a flexible system that could accommodate a wide range of working arrangements and patterns that people experience during their lifetime.
Here are some highlights from that address:
Objective of superannuation – a bill to enshrine in law the objective of superannuation — which is ‘to provide income in retirement to substitute or supplement the Age Pension’. This is, the first time Government has had such a clear definition of what our superannuation system is intended to do – and importantly what it is not there to do. It is about increasing the number of Australians who are self-sufficient in retirement. It is not about estate planning. It is not about tax minimisation.
Flexibility of the system – Designed to improve the superannuation balances of more than 800,000 Australians, the Minister highlighted the challenges that many of the ‘hardworking’ and ‘aspirational people’ have different and broken work patterns dependent on their jobs and family circumstances. A level playing field for the self-employed and employees will allow the annual concession cap to be accessed, regardless of your employment arrangements.
CIPRs – And more choice means more development of income products for retirement. Developing a framework for CIPRs is key to support Australia’s rapidly aging population. The 2015 Intergenerational Report showed that ‘by 2055, the number of Australians aged 65 and over is projected to more than double, while one in every 1,000 people will be 100 or older’. The Government will now look at ways to treat new products under the Age Pension means test, plus release a discussion paper on key policy issues for a framework for CIPRs.
Future of Superannuation – The superannuation package now before Parliament was described as a ‘significant milestone’ and one that would ‘improve the equity, sustainability, flexibility and integrity of the superannuation system.’ The Minister outlined the reform agenda would remain ongoing, particularly in relation to efficiency and competitiveness and the Productivity Commission will complete its delivery of its final report for stage 1 shortly, with a draft for stage 2 released in the first half of 2017 – now only 6 weeks away. And post the full implementation of the MySuper reforms 1 July 2017 a full review into efficiency and competition will be completed.
Next year will also see the Government progress superannuation legislation previously before Parliament. It includes ‘extending choice of fund arrangements; improving superannuation governance by requiring superannuation trustee boards to have a minimum of one third independent directors including an independent Chair; and increasing transparency by requiring super funds to disclose information about their underlying assets and choice products to their members.”
With the Government’s continued focus on improving performance and confidence in the system – and a heads up that insurance in superannuation is next on the radar – 2017 is shaping up to be another year of transformational change for us all.
Head of Customer Advocacy and Assurance