The Australian government is proposing significant 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. With Australia’s population at 25.4 million as per the 2021 census, these reforms aim to address the increasing demands on the system. Treasurer Jim Chalmers announced the changes at a pensions industry conference.
The changes include providing Australians with more online resources and information about their retirement options, as well as better retirement products. The government plans to update regulations in the coming years and introduce 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 said in a pre-recorded speech on Wednesday.
“We are working to ensure there is as much of a policy and product focus on the retirement phase as there is on the accumulation phase.”
The reforms will focus on expanding access to reliable information, supporting innovation in superannuation products, and introducing a new reporting framework centered on retirement outcomes. In addition, a new set of voluntary “best practice principles” will be introduced to guide the industry in designing modern and high-quality retirement products. The government plans to consult on a draft version of these principles next year.
The superannuation industry has come out in support of the initiatives.
Jim Chalmers discusses superannuation changes
Debby Blakey, chief executive at HESTA, expressed support for the reforms, noting their potential to better address the needs of women and lower-income earners.
Aware Super echoed this sentiment, emphasizing the importance of innovative retirement products tailored to members’ individual needs. AMP chief executive, Alexis George, pointed out the need for a collaborative effort from the government, industry, and regulators to build financial confidence among Australia’s retirees. George emphasized the importance of financial literacy, simplified retirement systems, access to affordable financial advice, and innovative solutions to provide assurance on lifetime income.
Blake Briggs, chief executive of the Financial Services Council, called for the development of voluntary best practice principles that recognize the diversity of consumers’ needs in retirement. He stressed that good retirement outcomes encompass product features as well as guidance and financial advice services. The Super Members Council highlighted the crucial role of financial advice in the retirement system, urging the government to prioritize reforms that enable more Australians to access financial advice.
The council pointed out that more than 70 percent of Australians would want advice from their super funds if it were tailored to their circumstances. These efforts signify the government’s proactive approach in adjusting the pension landscape to meet the needs of a growing retired population, ensuring long-term sustainability and improved quality of life for Australia’s ageing citizens. The industry regards these reforms as a significant step forward in delivering better retirement products and experiences.
