Speaking at the 2024 ASFA Conference in Sydney on Tuesday morning, Treasurer Jim Chalmers has unveiled the Albanese government’s priorities in reforming the retirement phase of superannuation, noting that the local super system is reaching a “pivotal moment”.
According to the Treasurer, Australia faces more than 2.5 million people retiring in the next decade, while within two decades, most people retiring will have been accumulating superannuation at 9 per cent or more annually for the duration of their working lives.
Within the next 40 years, drawdowns from super are also expected to increase from 2.4 per cent of GDP to 5.6 per cent.
“As our economy changes, population ages and the super system evolves, more and more Australians will draw down on bigger pools of savings that they will rely on for longer,” Chalmers told attendees.
“Today, I am announcing a new package of reforms that will help give retirees peace of mind, help them make their super go further and provide more support to navigate retirement.”
Namely, the government is focusing on four key areas to strengthen retirement outcomes.
1. Enhanced independent guidance
The government has said it will expand and refresh resources on the Moneysmart website, ensuring retirees have easy access to independent, reliable information on superannuation and retirement options.
It has also committed the Australian Securities and Investments Commission (ASIC) to leading a consumer education campaign to raise awareness among people approaching retirement and in retirement, with the rollout of new resources to commence in the first half of next year.
2. Better retirement products
“We are improving the innovative income stream regulations and supporting more innovation in retirement products,” Chalmers confirmed on Tuesday.
According to Treasury, the updated regulations will commence from 1 July 2026, with consultation on draft regulations ahead of this.
The changes include allowing funds to offer product features that members want, such as money-back guarantees and instalment payments instead of an upfront lump sum.
3. Best practice principles
A new set of voluntary best practice principles will guide the superannuation industry in designing “modern, high-quality income products that support Australians’ financial security in retirement”.
Consultation on draft principles is to begin in 2025, the Treasurer confirmed.
4. Increased transparency
Chalmers also announced that a new reporting framework on retirement outcomes would offer members greater transparency and create common understanding for success in the retirement phase.
“The new Retirement Reporting Framework will commence from 2027 and help monitor outcomes for members in retirement in a consistent and transparent way,” he said.
Meanwhile, the Australian Prudential Regulation Authority and ASIC have been tasked with a Pulse Check report by the end of 2025, aiming to track trustees’ progress implementing their strategies to meet obligations under the Retirement Income Covenant.
Chalmers told attendees that these reforms will work in tandem with the government’s Delivering Better Financial Outcomes package, and that it would consult on the changes in detail next year.
“Surely even our political opponents, who have been trying to undermine and diminish compulsory super whenever they can for partisan reasons, will see these changes as practical, pragmatic, and sensible and support them. We’ll see,” the Treasurer said.
“But we still have work to do together. We need your feedback, your advice and your expertise as we refine this package.”
Industry welcomes reforms
Following the Treasurer’s announcement on Tuesday, the Association of Superannuation Funds of Australia (ASFA) welcomed the sweeping reforms.
“These reforms represent a step forward in ensuring Australians not only save for retirement but also have access to the tools and products they need to make the most of their super,” the industry body wrote, and especially welcomed the focus on improving consumer education and guidance.
“Improving consumer education is key to helping Australians make informed decisions about their retirement,” ASFA CEO Mary Delahunty said.
“Super funds have shouldered a lot of the responsibility for educating Australians – we welcome an increased effort from the government in this area because it is so important in helping people make good decisions.”
ASFA promised to engage closely with government, regulators and members to ensure the framework reflects the needs of superannuation fund members.
