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Well-run SMSF segment drives industry

An efficient SMSF sector helped steer the whole superannuation industry to deliver value for all Australians, according to BT Financial Group chief executive Brad Cooper.

“Self-managed superannuation funds have a special place in our superannuation framework,” Cooper told a Trans-Tasman Business Circle briefing in Sydney today.

“They provide a mechanism to allow highly engaged individuals with investment expertise to manage their own superannuation.

“From an investment management perspective, you need to be your own expert.”

That could result in difficulties in critically judging investment performance, he noted.

“But I maintain that the presence of a well-managed SMSF segment helps drive the whole industry to better deliver member value.

“I would, however, implore trustees of their own funds to ensure they avail themselves of appropriate advice to make sound decisions.”

He stressed it was now a pivotal time to safeguard and strengthen the financial future of Australians.

“For over 25 years, we have built a thriving superannuation scheme for Australia that is deservedly the envy of much of the world and as a nation we had the foresight and the courage to implement a system that provides an opportunity for Australians to have a dignified retirement,” he said.

“Fast-forward to today, and Australians have invested more than $2 trillion in superannuation assets, and at its current trajectory the system is projected to double to $4 trillion in the next nine years and reach $9.5 trillion by 2035.

“This currently makes it the fifth largest pension pool in the world, despite having a population size that ranks 52nd globally.

“Still, I observe that today this system, and the intent for which it was created, is maturing at a time when four deep structural and cyclical changes look set to reshape its future.”

Firstly, Australia was facing an acute demographic shift, rendering the current tax-payer funded pension system unsustainable, he said.

“The uncertain current legislative agenda is threatening the confidence we place in a long-term savings system, persistent low growth and volatility is encouraging a ‘hunt for yield’ behaviour, and digitisation is heightening customer expectations across all their financial interactions.”

Critical action was therefore necessary, he stressed.

“It is crucial that we have a bipartisan approach to superannuation, starting in this 45th parliament,” he said.

“We must uncouple our long-term savings system from an annual federal budget cycle, and finally the industry must work in unison to improve customer engagement and build confidence to create a long-term savings plan for retirement, both in and out of superannuation.

“The foundation for all these priorities is legislating a universal agreement on the objective of superannuation – it is the compass by which the success of superannuation policy will be measured and the guide for all future policy changes.”

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