Funds urge government to ‘expedite’ changes expanding their role in advice

The Super Members Council (SMC) has encouraged the government to “swiftly” consult and legislate the retirement and super component of the financial advice reform package before the end of this year.

Citing research which suggests that 73 per cent of members would trust advice from their super funds if it were specifically tailored to their circumstances, SMC said in its retirement income submission that there is “a huge appetite” for high-quality, low-cost and no-cost advice to help people plan wisely for retirement.

The council opined that advice remains the “missing piece in the retirement puzzle”.

“We want to ensure retirement is simple, easy and flexible. People should be able to have confidence that they are in a good product that’s right for them,” said SMC chief executive Misha Schubert.

Moreover, SMC suggested that funds need more support from the government to be innovative. The support they seek includes the removal of barriers preventing improved use of digital solutions and the implementation of necessary changes to allow funds to provide “useful nudges” without them being deemed personal advice.

The nudges, the council explained, would be particularly aimed at members who are resistant to paying for comprehensive personal advice or are wholly disengaged from their super savings.

The SMC also encouraged the government to consider and clarify the anti-hawking laws to ensure super funds can proactively contact existing members to provide guidance on their retirement options.

Data sharing arrangements were also highlighted, especially with social security agencies such as Centrelink and the Department of Veterans’ Affairs (DVA), which, the SMC noted, could include a consent on the Age Pension application form per the Consumer Data Right to notify a retiree’s super fund, allowing the fund to follow-up with the member about their options for their super savings.

In addition, SMC added that at a whole of fund level, de-identified data sharing between the ATO, Centrelink, DVA and funds would allow funds to supplement the information they have about individual members to help them devise a range of retirement pathways.

SMC’s founding funds are eight of Australia’s largest – Australian Retirement Trust, AustralianSuper, Aware Super, Cbus Super, HESTA, Hostplus, Rest Super, and UniSuper.

In its own submission, Rest Super said it supports the proposed introduction of a new class of financial advice providers.

Following the legislative creation of a two-tier advice system, the fund noted it plans to support its members by enhancing its current three-layer advice system, which includes education and online calculators as layer one, followed by a digital advice tool as layer two. Layer three includes “personal advice” provided by “phone-based” advisers, incorporating collectively charged and individually charged advice.

In December, Financial Services Minister Stephen Jones said he supports the creation of a new class of financial advice providers, essentially granting funds, banks, and insurers the ability to give customers personal advice.