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The Treasurer, Josh Frydenberg, has flagged a review of retirement incomes.
Waiting only a week after the federal election, and prior to the cabinet being announced, Mr Frydenberg also commented that there were several superannuation reforms that remained outstanding from the last term of government.
The Productivity Commission said a review of the retirement system should be undertaken before super is increased to 12 per cent; however, Mr Frydenberg said the government had no plans to change the superannuation guarantee rise.
AIST CEO Eva Scheerlinck argued that reviewing governance structures in industry funds is ideological and misguided and that the equal representative model did not need to be tampered with.
“If the Royal Commission taught us anything, it’s that independent directors do not save financial institutions from ripping off consumers and bringing the system into disrepute,” she said.
“The equal representation of employers and employees on industry fund boards ensure a member voice at the table, and this has underpinned the consistent outperformance of the sector.”
Ms Scheerlinck said she hopes a review into the retirement savings system is not a distraction from implementing recommendations from the Royal Commission.
“The government committed to implementing the recommendations from the Royal Commission but so far has only acted on those relating to Superannuation,” Ms Scheerlinck said.
AIST will work closely with the government should such a review proceed and would advocate for the government to include SMSFs in any terms of reference, given their notable absence from the Financial Services Royal Commission.
The Australian Prudential Regulation Authority (APRA) has released its report on the analysis of industry self-assessment into governance, culture and accountability.
Of the 36 institutions targeted by APRA for the review, 11 were superannuation funds, including AIST members.
APRA initiated the report following their Prudential Inquiry into the Commonwealth Bank of Australia (CBA) which found a series of governance and cultural failings at the bank.
Following the CBA Inquiry report, APRA wrote to the boards of 36 large Australian financial institutions last June asking them to gauge whether the weaknesses uncovered by the CBA Prudential Inquiry also existed in their own companies.
APRA found the weaknesses identified in the Prudential Inquiry are not necessarily unique to CBA, with institutions showing consistent issues with non-financial risk management, accountabilities and risk culture.
APRA also found that in some cases, institutions may not have been able to identify the root causes of issues, resulting in further risk that actions to address weaknesses may not be effective or sustainable.
APRA noted in its report that the self-assessments generally contained less detail on remuneration frameworks. While most self-assessments focused on remuneration design, few commented on the effectiveness of the framework as a whole.
The Institutions’ assessments of their culture were also generally less comprehensive than other components in the self-assessments. Many institutions either struggled to articulate their assessment of culture or provided little evidence to support their assessment.
Victorian Senator, Jane Hume, will be in charge of the government’s superannuation portfolio, with the Prime Minister appointing her as Assistant Minister for Superannuation, Financial Services and Financial Technology in his post-election cabinet restructure.
Congratulating Ms Hume on the appointment, AIST CEO Eva Scheerlinck said AIST and its member funds were committed to working productively with the Assistant Minister and the Morrison Government on policies that improve the retirement outcomes of all Australians.
“We will continue to strongly advocate for policies that improve the fairness and sustainability of superannuation for all Australians, which includes a commitment to raising the Superannuation Guarantee to 12 per cent as scheduled,” Ms Scheerlinck said.
Ms Scheerlinck said there were a number of challenges ahead for the super industry, including the smooth implementation of recently legislated policies.
“There is a lot of policy and regulatory change ahead that superannuation funds are grappling with,” Ms Scheerlinck said.
“The implementation of the Protecting Your Super package of reforms, along with several other key policy changes, requires a focussed and committed government to ensure smooth implementation for the industry and the best outcome for super fund members,” Ms Scheerlinck said.
AIST has called for guidelines and has supported legislative changes that will assist the superannuation sector better support Aboriginal and Torres Strait Islander members by providing more flexibility in making superannuation death benefit payments that more accurately reflect cultural family structures.
AIST said in a submission to Treasury’s review into binding death benefit nominations and kinship structures it is supportive of broadening the definition of dependency to recognise cultural adoption and reflect First Australian kinship structures.
The review was implemented following evidence raised during the Financial Services Royal Commission that the legislative framework is not flexible enough to permit Aboriginal and Torres Strait Islander people to nominate individuals within their traditional kinship structure as the chosen beneficiaries for superannuation entitlements.
AIST argues in its submission that any changes to the law should not make the system more complex or difficult to understand for members. Proposed changes should provide the desired flexibility to trustees whilst not broadening definitions to the point which they become difficult to administer.
AIST has stressed that any processes developed need to filter down to customer-facing staff and, above all, any action needs to be developed in consultation with the Indigenous community.
Superannuation statistics released by the Australian Prudential Regulation Authority (APRA) show that MySuper assets have grown at the fastest rate out of all super assets over the past year.
The APRA quarterly statistics show that MySuper currently holds $670.6 billion in assets and is growing at a faster rate than the rest of the super sector.
It has grown by $69.6 billion in the space of a year, representing an increase of 10.8 per cent.
Overall, the entire superannuation sector grew by 6.7 per cent since March 2018 to now hold a total of $2.782 trillion in assets.
In their previous quarterly report of superannuation assets released last December, APRA reported that the total assets of SMSFs and exempt public sector funds had fallen with combined losses of over $3 billion.
Both of these sectors have experienced growth in the opening quarter of 2019 with gains of 4.5 per cent and 3.7 per cent respectively.
30 May 2019