Your home for profit-to-member Super
Join the leading voice in profit-to-member super
Our full list of member super funds
View the upcoming courses in your city
AIST's flagship educational program
SuperGrads is a professional development graduate program to help fast track your career
Listing of all upcoming events
The premier idea sharing and networking event for Australia’s $1.4 trillion profit-to-member super sector
AIST's annual Superannuation Investment conference
Research, insights and advocacy on the most pressing topics in super
Our response to changes in the political and policy environment
From AIST's governance code to practical guidance and toolkits
Industry news, latest resources and event updates
Stay connected to the latest policy news
Photo, audio and video content
Our mission, vision and values
Meet our team
Our board of directors, constitution and committees
News, insights and resources as they unfold.
Stay up-to-date with the issues affecting super.
A seminal report released this week by ASIC has raised serious questions about the value of disclosure in protecting consumers in complex financial products, including superannuation.
The Report – involving a joint study by ASIC and the Netherlands Authority for the Financial Markets – examined 33 international case studies and found most consumer disclosure regarding financial products was ineffective and, in some instances, harmed consumers. The study included research by Australian academics which found that superannuation dashboards were vulnerable to manipulation.
AIST welcomed the Report, noting it reinforced that a default safety net system was vital to protecting consumers. AIST research – as well research from the Productivity Commission – has consistently showed that when consumers go outside the default super safety net, they often end up significantly worse off.
AIST CEO Eva Scheerlinck said while meaningful disclosure was necessary to help industry stakeholders and experts assess the efficiency and effectiveness of the super system, it was insufficient for consumers.
“In a mandated system it is unreasonable to expect consumers to do all the heavy lifting. Members who are outside the default system need better regulation and performance benchmarks,” Ms Scheerlinck said.
While APRA is set to introduce benchmarking in the MySuper sector, AIST remains concerned that there are no immediate plans to extend this to the Choice sector where underperformance is a much bigger problem.
Releasing the Report, ASIC Deputy Chair Karen Chester, said ASIC was shifting from disclosure as its default consumer protection strategy to a more consumer-outcome focused approach that enforced product simplicity.
Fund performance and the Retirement Income Review were top of the agenda at AIST’s Chairs’ Forum in Canberra this week.
Attended by the chairs of 25 AIST-member funds, the forum heard from the Assistant Minister for Superannuation, Senator Jane Hume, Shadow Minister for Financial Services, Stephen Jones and representatives from APRA and the ATO.
In a speech later released publicly, APRA’s deputy chair Helen Rowell warned trustees to expect a degree of discomfort from the implementation of APRA’s new heatmap on performance.
The heatmap will provide metrics on the performance of all MySuper products, covering investments, fees and costs, sustainability and, in the future, insurance. Despite strong advocacy from AIST pointing out that the problem of underperformance is greatest in the Choice sector, it does not appear that APRA will extend the heatmap to Choice products in the near term.
Productivity Commission data shows there is currently $24.2 billion of superannuation assets sitting in underperforming Choice products, the vast majority of which are held in retail funds.
Ms Rowell said the heat map was intended to be a starting point for member outcomes and performance assessment. Trustees will be expected to build on the heat map and consider a broader range of metrics appropriate to their operations, and to also consider performance at a cohort level.
Ms Rowell acknowledged the heatmaps provided carveouts for Choice data, saying “One legitimate complaint is that the heatmap will not, at first, cover the choice sector. This is something we intend to rectify once we start expanding our superannuation data collection with sufficiently reliable and high-quality data on this sector of the market.”
National advocacy group, Women In Super, is calling on Treasurer Josh Frydenberg to include an additional term of reference in the upcoming Retirement Income Review that explicitly focusses on the worsening economic insecurity of women in retirement.
In an Open Letter to the Treasurer that was signed by more than 100 prominent business people , including AIST CEO Eva Scheerlinck and many representatives of AIST-member funds, Women in Super said improving retirement outcomes for women needed to be a specific objective of the Review.
The Letter notes that systemic drivers of the gender retirement gap have been well documented, and that adding a female-focused term of reference will ensure a specific gender analysis of current and alternate policy settings to improve retirement outcomes for women.
AIST has commented that the Review needs to recognise that without a gender lens, policy decisions will continue to be based around the traditional male experience and ignore the working reality of women.
A case in point is the arguments in favour of freezing the SG at the current rate which are based entirely on modelling that assumes that the experiences of women in the workforce are the same as men.
The first consultation paper for the Retirement Income Review is expected in November.
ASIC has warned Australians who have a self-managed super fund to assess whether the product is appropriate for them, outlining ‘red flags’ for consumers to consider.
The red flags - highlighted in a previously released report that examined member experiences in setting up and running a SMSF - aim to alert members and financial advisors that an SMSF product is not in their interest if any of the flags relate to their situation.
ASIC says an individual should strongly reconsider an SMSF if:
ASIC Commissioner Danielle Press noted that SMSFs can be an attractive option for investors wanting more control over their superannuation investment strategy. But given the skill, care and diligence required to run one, she said consumers needed to ensure they were fully aware of their responsibilities.
“Consumers are all too well aware of the potential benefits that might stem from using a SMSF, but are not equally alive to the considerable risks and responsibilities that come with the deal,” Ms Press said.
ASIC is will release a fact sheet - SMSFs: Are they for you? - to all newly registered SMSF trustees in November as a trial.
ATO figures show there are nearly 600,000 SMSFs in Australia holding about $750 billion in assets, ahead of both industry funds ($719 billion) and retail funds ($626 billion).
AIST has challenged APRA’s decision to defer Choice products from the draft SPG 516 Business Performance Review in a submission that also calls for additional scrutiny on related party payments.
While our submission to APRA’s draft Prudential Practice Guidance – SPG 516 Business Performance Review, broadly welcomes the emphasis on the promotion of members’ financial interests, we note that the sheer size and number of member accounts in the Choice sector warrant it being covered in the guidance. Choice accounts for 41% ($1 trillion) of total assets and 39% (11 million) of member accounts.
APRA has indicated that aspects of the outcomes assessment will not need to be completed for Choice products until the SIS Regulations are finalised.
On the issue of returns paid to a parent company, AIST has called for further and more detailed guidance, noting the Financial Service consideration of the conflicts inherent in such arrangements.
The requirement for RSE licensees to undertake an annual business performance review (BPR) commences from 1 January 2020, with the first business performance review required to be completed by 31 December 2020.
Despite SIS regulations supporting the member outcomes laws and the final SPG 516 yet to be released, funds are expected to have updated, or be in the process of updating, their strategic objectives, business plans and expenditure management processes, to comply with the new SPS 515 Standard from 1 January 2020.
Funds should also understand their proposed business performance review design prior to 1 January 2020.
As set out in Prudential Standard SPS 515, the business performance review requires funds to analyse their performance in achieving their strategic objectives, including:
In draft SPG 516, APRA has also provided guidance on expectations for the timing and sequencing of the legislated outcomes assessment and the business performance review. APRA plans to release the final SPG 516 by December 2019.
APRA will then make any necessary further adjustments to SPG 516 to reflect the SIS Regulations once they are finalised.
New data released by Rainmaker Information shows that average fees across the MySuper sector have fallen for the first time in six years.
The report says average ‘gross’ fees are now 1.1 per cent. This is down from the 2018 average of 1.2 per cent, an 8.3% decrease.
Rainmaker notes that the fall in gross fees is primarily a result of retail funds lowering their fees as a competitive reaction to members moving across to lower priced profit-to-member funds following the Financial Services Royal Commission and the Productivity Commission inquiry into super.
Regulation around MySuper offerings has also clearly played a part, with the fees charged by retail funds in the Choice sector still extremely high on average. The large differential between high fee products in the Choice sector and lower priced MySuper products reinforce the value of the default system.
The Rainmaker report reveals that out of the top ten funds to have dropped their fees in the last year the most, the top five are all retail products, with the top four all owned by AMP.
One of the earliest recommendations of the Royal Commission to be dealt with by the Government, banning grandfathered conflicted remuneration, has passed its final hurdle in the Parliament this week.
The Treasury Laws Amendment (Ending Grandfathered Conflicted Remuneration) Bill 2019 was passed through the Senate on Monday.
The law ends grandfathered conflicted remuneration payments to financial advisers, an issue that was explored in detail during the Financial Services Royal Commission.
The Government has announced the establishment of a new disciplinary system and a single disciplinary body for financial advisers, as recommended by the Financial Services Royal Commission.
The new disciplinary system will replace the role of code monitoring bodies which were due to be established by industry associations under professional standards reforms. Subject to the passing of relevant legislation next year, it is set to be in place by 2021.
Evidence presented at the Financial Services Royal Commission showed poor financial advice was responsible for some of the more egregious cases of misconduct and consumer detriment.
17 October 2019