Limited interaction with fund members in the accumulation phase is hampering retirement outcomes for those in Australian Prudential Regulation Authority (APRA)-regulated funds, with the government calling for better outcomes as it works towards its proposed objective of superannuation.
Assistant Treasurer and Financial Services Minister Stephen Jones said the response from stakeholders to the proposed objective had been mainly positive and its implementation would be important for those heading towards retirement.
“With 5 million Australians either retiring or approaching retirement, funds must urgently lift their game,” Jones said during a speech today in Melbourne.
“They will also need to help their older members start to draw down on their savings in a way that best meets their needs.
“Superannuation has a unique challenge because we have made it so easy for members in the accumulation phase to limit their engagement with their fund.”
However, the future is likely to require more meaningful interactions between funds and their members.
Jones noted standards among APRA-regulated funds should be higher, pointing to an Australian Securities and Investments Commission (ASIC) report from December 2022 that found 20 per cent of funds failed to consistently respond to complaints within required timeframes.
He also said a joint APRA and ASIC report in June found APRA-regulated funds were not yet meeting obligations under the Retirement Income Covenant to help members prepare for retirement.
“This is a $3.5 trillion industry. This is not a standard that members will accept. It’s certainly not a standard the government will accept and it shouldn’t be a standard funds accept,” he said.
Despite this, he said the government would continue to look at how these funds could provide retirement advice given that only a quarter of people seek financial advice at that time.
“The lack of advice and information around retirement incomes is clearly the biggest gap in the advice market and so the government has committed to expanding the role that superannuation funds will play in providing personal financial advice,” he said.
“This is an opportunity for funds to differentiate themselves through their level of service.”
