The government is still in the process of trying to work out an official objective for the superannuation system. Their preferred definition is “to provide income in retirement to substitute or supplement the age pension.” They’re looking to make an Act relating to the purpose of super that’s binding on all future decisions. It’s a big deal, since it’ll affect the trillions of dollars already under management. There’s also the future employer contributions, which are set to ramp up past the current 9.5%.
To be fair, legislators have had to consider arguments from several different stakeholders. Perhaps the most prominent is the Association of Superannuation Funds of Australia (ASFA), which appeared before a Senate enquiry to try and push its version of the purpose of super. ASFA boss Dr Martin Fahy said that the government’s preferred purpose isn’t ambitious enough. They think that the system should aim to give people a “comfortable standard of living”. They want fewer people to need the age pension at all, and they want general living standards to improve for retired people. It’s a fair consideration, in light of the stats on how many older Aussies currently live in poverty. Just for the record, it’s about one in four older Aussies. This suggests that the Age Pension does not offer income of an adequate ‘safety net’ level. Simply replacing it wouldn’t be good enough.
On the other hand, there’s a reason the government wants to keep the definition narrow. Based on the Financial System Inquiry outcomes, they think that subjective definitions like ‘comfortable’ and ‘adequate’ could leave the door open to rules that give big tax breaks and other benefits to members whose balances are already enough to support a lifestyle that goes way beyond what taxpayers should have to support.
Get your members back in touch with what their super is for
No matter what conclusion the Senate comes to, it’s unlikely that future regulations and policy based on this new law will operate counter to the interests of the biggest lobbying group of all – the super members themselves. Their voting power isn’t to be ignored, which is why it’s a good idea to keep your members in touch with the functions and aims of super as much as possible.
One of the most engaging and powerful ways to do this is through financial education. Online financial education is a cost-effective and scalable option. It really gets the end user thinking about their retirement goals and how super can help them reach those goals. It’s a great way to take members from a stage in their customer journey where they’re vaguely aware and curious about their super balance, to one where they’re real advocates for the importance of super as part of an effective retirement strategy.
Money101 offers a variety of superannuation units, starting with the bare-bones basics on how super works. They’re available as off-the-shelf offerings, ready to go in a few days, or customised online experiences with your fund’s colours and branding.