Federal minister for financial services Stephen Jones has called out superannuation funds for being too focused on simply accumulating members’ retirement savings and not prioritising supporting those members in retirement.
Mr Jones made the comments in a speech delivered at the Australian Financial Review’s Super and Wealth Summit in Sydney. He acknowledged that delivering strong returns was the metric by which super funds had mostly been assessed in the past, but said this won’t be the only factor they’re assessed on going forward.
“The superannuation industry will be judged by the standard of member service received throughout a person’s working life and retirement,” Mr Jones said.
“And members are not judging their superannuation fund against another fund. They’re judging their fund against the service they receive from their bank or their insurer.
“And if they don’t receive an acceptable level of service, members might just start to question the value proposition of superannuation.”
He said he though many funds had lost sight of the objective of super, which is “to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.
Scrutiny over funds’ member services and retirement outcomes will only increase under the Albanese government, Mr Jones said, and it was also a key strategic priority of the Australian Securities and Investments Commission (ASIC).
“Members are going to want help to meet their retirement goals,” he said.
“To be in the right products and to be supported when things go wrong.”
Financial advice also needs to change
While Mr Jones had stern words for the superannuation industry, he also noted there was one area of financial legislation that was holding funds back from delivering positive retirement outcomes for their members.
“The financial advice laws in this country are not fit‑for‑purpose,” he said.
“It’s too expensive, too hard to access and too strangled by red tape to be helpful.”
Reforming financial advice has so far been a key priority for the government, with the Delivering Better Financial Outcomes (DBFO) Act becoming law in July. One of the key aims of that legislation was to reduce the cost of financial advice, seen as a major barrier to a comfortable retirement.
“Four in five Australians aged 45 to 54 said they needed financial advice, but did not have the capacity to pay for it,” Mr Jones said.
“We have over five million Australians at or approaching retirement and they are hungry for advice and information.”
“We are committed to improving the retirement phase of superannuation and the foundation stone for this project is helping more Australians access quality and affordable financial advice.”
How would you rate the service from your super fund? Are you happy with how your retirement turned out? Let us know in the comments section below.
Also read: Calls to scrap compulsory super in favour of US-style retirement accounts
