A chance to make superannuation look super
Pauline Vamos believes it is time for the rebranding of the superannuation industry.
This year will bring an opportunity for the superannuation industry to rebrand itself. It will be a year with significant and unique opportunities as well as challenges.
The first opportunity will come with the continuation of the debate around the appropriate tax, social policy and legislative settings for delivering income streams in post-retirement – and how this policy area should link in with social security, pension and health policy settings.
This is a live debate that started before the tax forum last year and I believe we will see some announcements in the May Budget.
The industry clearly has a significant role to play here both in terms of advising on policy settings and in delivering those policies.
These conversations will be linked to increasing productivity and encouraging people to work longer, as well as ensuring there is greater flexibility in workplace laws to cater for older workers.
This will be made easier with the revised and combined portfolio now with the Financial Services Minister, Bill Shorten.
Opportunities for funds to provide greater variety in post-retirement products will emerge out of this, and funds will need to look at investment strategies that take members through retirement.
New offerings will be backed by research produced last year on the buying behaviour of retirees and the growing knowledge of market, inflation and longevity risk.
Closely linked with this will be the deepening relationship between superannuation funds and insurers as competition drives the need to retain members in the fund when they retire.
The second opportunity for funds will be access to greater diversity in the fixed interest and unlisted asset space. There will be the continued escalation of funding shortages for Australian banks and funding shortages for infrastructure.
Again, both conversations were started last year but must be resolved and put into action this year. Thinking and initiatives to increase the corporate bond market and fund infrastructure are escalating across the Government, Treasury and the superannuation industry, including the work being done by the Infrastructure Finance Working Group and Infrastructure Australia.
It is a year where there will be more recommended changes in terms of coverage of the superannuation system – leakage from the system by the self-employed, contractors and casuals will need to be revisited as the percentage of these types of workers increases and the nature of their work changes.
It will be a year of increased scrutiny on net performance: this is inevitable with market volatility and an ageing population that is more engaged with retirement and their superannuation.
Financial literacy is again on the agenda with Financial Literacy Week, and no activity around financial literacy can ignore superannuation. This could be the year when super is finally part of our schooling, apprenticeship programmes and immigration induction.
Year 2012 will also bring legislative certainty, the new MySuper default, the Australian Prudential Regulation Authority standards, account consolidation and electronic data standards.
New governance requirements and new reporting standards mean that every aspect of a fund’s operation will need to be reviewed and possibly changed. With this certainty will come more mergers, but also increased competition as new players enter the market with new products.
Part of this legislative certainty will also deliver intra-fund financial advice and scaled advice, providing many funds with the opportunity to review their advisory services.
Year 2012 is not a year of ‘business as usual’ for the superannuation industry, as every aspect of its working environment is under pressure. We will see a significant maturing of the industry as it responds to changing demographics, the digital age, volatile markets, regulatory change, increased competition and a growing recognition that the superannuation pool is a key economic driver in the Australian economy.
Pauline Vamos is the chief executive officer of the Association of Superannuation Funds of Australia.
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