The head of Australia’s largest industry superfund has warned of the significant changes afoot for those working with other people’s retirement savings.
In his speech delivered during the Conference of Major Superannuation Funds in the Gold Coast this week, Australian Super chief executive Ian Silk reflected on 2018, a year he believes “shook the foundations of the super system”.
“The royal commission, the Productivity Commission, and the budget changes in combination represent a huge wake-up call for all of us in the industry. They were a set of convulsing factors that will reshape how the industry operates for members,” Mr Silk said.
The royal commission reminded all of us that obeying the law is the first rule, but behaving in a way that is consistent with community expectations is critical too. [Commissioner Hayne’s] penetrating ‘can you, but should you’ questioning had some witnesses squirming, and many others reflecting on their good fortune not to be asked the same questions.
However, the fact that industry funds emerged largely uncriticised from the royal commission process, and certainly in better shape than the retail sector, is “no cause for triumphalism”, the CEO said.
“That the profit-for-member sector was not found to have committed widespread misconduct, or behaved in a way that failed to meet community expectations, should be a base level expectation of profit-for-member funds,” he said. “There is no basis for complacency or hubris whatsoever.”
Mr Silk believes that the retail sector may regroup and become strong performers, but admitted that their business models make this a challenging prospect. He suggested that a number of new models may emerge to take the place of retail super.
While the Productivity Commission report into the superannuation industry recommended a ‘best in show’ outcome, whereby Australians are able to select a fund from a list of top performers, Mr Silk said Australian Super is steering clear of benchmarking.
“Rather than pointing over there and saying we’re better than this or that group, the only focus of the profit-for-member sector should be to be exemplary in performance and behaviour and being the very best we can be for members,” he said.
While the royal commission and productivity commission clearly concluded that the industry sector is superior to the retail sector for performance and executive conduct, the Australian Super chief warned his fellow industry super funds not to rest on their laurels.
“Member and community expectations are going to be higher, regulators are going to be more aggressive, political focus will be more intense and the media scrutiny will be sharper. And all of this in the context of a more challenging investment environment.”
Looking to the future, Mr Silk foresees a “revamped and smaller SMSF sector” following a full inquiry into its performance as well as a new, tighter regulatory regime.
“And maybe a few less self-congratulatory ‘every player wins a prize’ industry awards nights,” he said.
MLC Life Insurance has been appointed as Maritime Super’s new group insurer following an extensive tender process. ...
The Australian Institute of Superannuation Trustees have called on the incoming government to develop an online tool to help Australians mak...
AMP is planning to reduce its superannuation products and investment options as part of its bid to regain customer trust post-royal commissi...