The Australian government is proposing changes to the nation’s A$3.9 trillion pension industry to prepare for the retirement of an estimated 2.5 million people over the next decade. Treasurer Jim Chalmers will announce the planned reforms at a pensions industry conference on Wednesday. The changes include giving Australians access to more online resources and information about their retirement options and better retirement products.
Regulations will be updated in the coming years, and the government is also planning a new reporting framework for retirement outcomes. “As our economy changes, population ages and the super system evolves, more and more Australians will draw down on bigger pools of savings, that they will rely on for longer,” Chalmers is expected to say in a pre-recorded speech on Wednesday, according to an extract sent to media outlets. The federal government is set to introduce new “best practice” principles for superannuation products, aiming to enhance the management and outcomes for retirement savings.
A panel of experts shared their views on what these principles should emphasize. Di Johnson, Senior Lecturer at Griffith University, highlighted the importance of education and financial literacy to ensure that retirees can make informed decisions about their savings. Geoff Warren, Associate Professor at the Australian National University, pointed out the need for tailored products that cater to diverse retirement needs and circumstances.
Helen Hodgson, Professor at Curtin University, emphasized regulatory frameworks that protect consumers while fostering innovation within the industry. Jeannie Marie Paterson, Professor of Law at The University of Melbourne, advocated for transparent product disclosure to help consumers understand the risks and benefits of different superannuation options.
Superannuation reforms aimed at better outcomes
Natalie Peng, Lecturer in Accounting at The University of Queensland, called for performance benchmarks that help retirees evaluate how their funds are being managed. The government plans to consult on a draft of these principles next year, aiming to develop guidelines that will help the superannuation industry design modern, high-quality retirement products. The superannuation industry has come out in support of the initiatives unveiled by Treasury towards reforming the retirement phase of superannuation.
Debby Blakey, chief executive at HESTA, said the fund welcomes the government’s proposed reforms, which offer a valuable opportunity to help ensure the needs of members, women, and lower-income earners are better accounted for in the modernized retirement system. Aware Super also expressed satisfaction with the initiatives aimed at helping super funds deliver better products and retirement experiences. Joshua Lowen, insights manager at SuperRatings, mentioned that the research house remains “generally supportive” of actions that increase innovation and transparency within superannuation.
AMP chief executive, Alexis George, pointed out that building financial confidence among Australia’s growing numbers of retirees remains a significant socio-economic challenge, requiring a collaborative effort from the government, industry, and regulators alike. Blake Briggs, chief executive of the Financial Services Council, remarked that the industry body looks forward to working with Treasury on the outlined scope of work, including the development of voluntary best practice principles. The Super Members Council also highlighted access to quality and affordable financial advice as the “missing piece in the retirement puzzle” and called for the promised reforms to be urgently legislated.
“These important reforms are a big stride forward to give more Australians more choices in how they start to draw down and spend their super as income in retirement,” said SMC chief executive, Misha Schubert. The superannuation industry remains hopeful that these reforms, once implemented, will offer better outcomes and choices for retirees, ensuring greater financial security and confidence in their retirement years.
