The government will treat industry, retail and self-managed super funds as equals as it moves to lift confidence in the superannuation system and encourage more efficient and effective post-retirement income solutions.
Speaking at the National Press Club in Canberra on Wednesday, Assistant Treasurer Kelly O’Dwyer flagged a series of announcements on retirement income solutions to come over the course of this year.
She said there had been “a lot of work that’s been going on” focused on retirement incomes – one of the “critical areas that was identified by David Murray in the Financial System Inquiry [FSI]”.
“[He said] we need to get the regulation right so we could encourage these comprehensive retirement income products that would allow people to maximise income in retirement,” O’Dwyer said.
“We will be making some announcement on this later on this year, and it is an area we are vey focused on in ensuring we get it right. There is a lot of work that has gone into this.
“In the not-too-distant future I will be giving a speech that addresses this issue.”
O’Dwyer said the government “will not be seeking to favour or go after industry funds or retail funds or self-managed super funds; we won’t be seeking to go after or favour employers or unions, either”.
“But we will be unashamedly focused on getting the framework right for millions of ordinary Australians who are required to contribute to superannuation and rely on superannuation for their retirement income,” she said.
Issues that affect financial planners
Day two of the 2016 Conexus Financial Post Retirement Conference, in Sydney on March 10, will focus on the issues that affect financial planners in the provision of advice to clients as they transition into retirement, and beyond.
It will feature a range of speakers and presenters from Australia and overseas, focusing on helping financial planners in their role of helping Australians negotiate the superannuation system to achieve the best possible financial security when they stop working and retire.
O’Dwyer said it was “essential that we get the pillars right to support our retirement income system, and confidence in our superannuation system”.
“Compulsory contributions are legislated to rise to 12 per cent by 2025. This highlights the need to get the basics right, otherwise we will just be throwing more and more money at a suboptimal system. Our system can’t just be good enough; it must be an A-grade 21st century superannuation and retirement income system.”
O’Dwyer said the government would seek to “shift the focus away from retirement balances to retirement incomes, which means an unrelenting focus on improving choice in retirement products to better meet the needs of retirees”.
“We want a superannuation system that delivers outcomes for those that we are forcing to contribute, not just for the industry,” she said.
“We want a system that will encourage people to participate actively but which will protect the disengaged. That means more flexibility, greater choice in funds and products, more transparency, the strongest possible standards of governance, and competition to place downwards pressure on fees.”
Stable and sustainable
O’Dwyer said the government was “acutely conscious” of the need to ensure the system was both stable and sustainable.
“After all, people need to make long-term, decisions with confidence,” she said.
“We want a system that is fiscally sustainable with incentives that are targeted.
“We want a system that can withstand financial shocks, so members can be confident of their retirement incomes in good times and in bad. Critical to this is governance and prudential regulation.”
[tv playlist=’55a4af5c150ba0e92e8b459c’ theme=’pp_article’]
O’Dwyer said it was important to recognise that “different Australians have different work patterns”.
“That means being prepared to debate innovative policy ideas, like increased flexibility for catch-up contributions,” she said.
“If we get this right, it will begin to bridge the current gap between male and female superannuation balances. The median superannuation balance for women is only around 65 per cent of that for men.
“And finally, we want to reduce the complexity of the system. These are all fundamental to a sustainable and efficient retirement income system for all Australians.”
