Margaret Cole

At the Conexus Retirement Conference in August this year, APRA deputy chair Margaret Cole outlined the need for super funds to prioritise retirement as much as accumulation by pointing out that a further three million fund members will become eligible to draw from their super in the next 10 years.

“They are entitled to rely on their super fund for assistance as they plan for a sound financial future,” Cole said.

Jane Eccleston of ASIC pushed the point home further at the same conference. She said: “Without being able to provide personal financial advice to members there is little progress that can be made on retirement outcomes for members.”

Then Minister for Financial Services Stephen Jones weighed in.

“The government sees the lack of advice and information around retirement as the biggest gap,” he said “Members would significantly benefit from being able to access assistance, including to help them navigate simple decisions.”

Jones has also stated that the government expects funds to play an important role in providing this advice and guidance. Indeed, he saw it as a necessary part of the increased obligations now placed on trustees. The government has hence committed to expanding the provision of advice through superannuation funds.

So it should be no surprise that the government’s commentary around the Quality of Advice Review seems to be placing super funds at the epicentre of making personal financial advice available to more Australians.

With the additional obligations placed on super funds via the Retirement Income Covenant (RIC), it’s becoming obvious that the expectation on super funds from the government and members will result in significant change to how super funds will be run in the future.

Super funds can no longer be the passive custodian of Australians’ $3.5 trillion of retirement savings. The government is essentially ordering super funds to be more proactive in maximising retirement outcomes for members.

A better report card

So how can super funds meet these obligations and have a better report card when APRA and ASIC complete their next Retirement Income Covenant review in mid-2024?

The first step is to understand what members are seeking from their super fund alongside the obligations placed upon them by the RIC. Unsurprisingly they are very similar.

  • Nine out of 10 Australians would like their super funds to provide advice on issues that affect their ability to add to their super fund
  • More than half (53 per cent) of members want their fund to offer advice
  • Almost eight in 10 (79 per cent) want their super fund to be more proactive in providing advice

Members are crying out for their super fund to not only offer advice, but also to be proactive in providing them with that advice.

The next hurdle that super funds need to overcome is how they can provide services to meet the RIC obligations at a scale that will result in appropriate advice for each individual member’s unique situation.