Addressing the SMSF Association National Conference 2021 on Tuesday, Ms Hume said the government wanted more consumers “to take an active interest in their retirement savings”, with reforms to the sector aiming to make fund comparisons easier through establishing what the minister called “an objective performance test”.
“The early access to super scheme demonstrated a welcome indication that Australians are becoming more engaged with super and retirement planning,” Ms Hume said.
“We have a system we can be proud of but it’s not perfect – the government will continue to take a common sense approach to policy with the best outcomes for fund members front of mind at all times.”
Ms Hume said with Australia’s super investment pool now the fourth largest in the world at almost $3 trillion – larger than the market cap of the ASX and Australia’s GDP – it was essential member funds were being used appropriately at all times.
“Our compulsory super system should allow people to be as engaged as they wish, and the government’s role is to get the policy settings right,” she said.
Following recent criticism from Liberal backbenchers around alleged misuse of member funds by the industry super sector, Ms Hume said the Your Future, Your Super reforms would tighten accountability for funds around their fiduciary responsibilities to members.
“The best interest duty will be amended to be the best financial interest duty, to remove any doubt about how trustees will use member money,” she said.
“This will ensure trustees are more accountable for their decisions and focus on financial outcomes.”
The comments came as the reforms were introduced to parliament by Treasurer Josh Frydenberg on Wednesday, with debate around the government’s legislation expected to continue in the House of Representatives on Thursday.
Mr Frydenberg said the reforms represented “the next step in modernising and improving the super system to ensure it is working harder”.
Despite a period of industry consultation earlier in the year, the bill was introduced to the House unamended, prompting criticism from the industry fund sector for the government’s refusal to make “sensible changes” around the specifics of its benchmarking system.
“The government’s proposed performance benchmark tests need strengthening and expanding. They must include all fees charged – the government has excluded administration fees from the test, which are far higher in the retail sector and how those funds generate profits for shareholders,” Industry Super Australia said.
“About 80 per cent of the choice sector will likely be shielded from the performance benchmark tests, despite the Productivity Commission finding this is where most of the dud funds are found. There is also no timeframe to test almost 70 per cent of for-profit funds – that is 6.7 million-member accounts holding $427 billion in assets.”
It’s not “engagement” when memebers are encouraged to raid their retirement savings for current living expenses. That’s the height of DISengagement with the system No common sense at all – just a desire to wreck something the other side set up. Turning super into a defacto welfare source for those not otherwise covered is about as cynical an exercise as you could dream up.
“Common Sense”. Banned Commission, ASIC lookback – and over 8 year, but Jane Hume defends and supports Intra Fund Advice fees, Intra Fund Advise. Tell me, if you are trying to remove conflicted advise from the system, where is the common sense in supporting Intra Fund Advice, delivered by product providers, paid for by members via a fee which the member can not opt out of, does not need to opt in to, does not need FDS and does not even need advice or a service to be delivered – and the fee can keep going and going?
Not sure I trust the Liberals – at lease I know Labors strategy and they are “winning the war” in regard to Super.
Being as engaged with their Super as they wish should extend to utilising the monies to purchase one’s primary residence also as is possible in some other countries. Given it’s a long-term investment that’s often used (by way of downsizing) to fund one’s retirement, and given housing affordability concerns in Australia makes sense to allow members to use what’s rightfully theirs. Of course the fact that it’s a tax-free investment is quite possibly the main reason the government don’t allow it, however, as they would lose their 15% on income year after year that it sits in an industry super fund.
In theory using super to help buy ones residence has some merit if the marriage lasts BUT, using super to buy a home and then go through a divorce and have the family law system give the lions share of everything to the estranged partner (including the super equity injected to buy the property in the first place) flies in the face of this suggestion. Perhaps an argument against this concept given Australia’s high divorce rate.
I’m not on board with using super to buy a house, maybe allow a 10% withdrawal but never the whole thing as in NZ. The Age Pension bill gets higher every year in this country – the only way one could reasonably support super to fund a PPR would be to amend the assets test to include the family home, somehow. It would be disastrous for city dwellers and a boon for the regions!
they will just start taxing pension eventually
And include the PPR in the pension means tests
How on earth is it common sense to rank funds when:
1. They are not including the administration fee
2. They don’t include the choice investments.
3. Funds can still class things like rent from property and private equity as conservative investments.
4. Do not include a bone fide risk assessment against each investment.
Seriously, APRA and ASIC should concentrate on doing their job properly (ie chase the crooks and make it easier for those that do the right thing) rather than trying to invent more things for themselves to get paid to do.
Funny that industry super refers to ‘other’ super funds as the choice sector. Are they the ‘no choice’ sector or is that just wishful thinking on their part?
The best interest financial duty will rein in a few of the worst excesses by industry super, which is great.
“The early access to super scheme demonstrated a welcome indication that Australians are becoming more engaged with super and retirement planning,” Ms Hume said.
Now she is comedian and spinning doctor. All this did was created an opportunity for Australians to raid their supers of up to $20,000 tax free with little or no understand of impact to their retirement income in the future.
When drawing their funds they were effectively cashing in their losses, so $20,000 was probably around $25,000 or more before the crash. At 7.8% per annum over the next 40 years – this equates to $560,472!!! So if you were 27, retiring at 67 – this is what you just gave up!
I’m still young but old enough to remember ASIC giving lessons on Conflicts 101 – if a client has a mortgage the adviser is conflicted to recommend an investment in product……”.
Archer 56, sounds like you have a conflict.