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“Superannuation funds should be able to provide more personalised and proactive nudges to members in order to assist them to improve retirement outcome.”
Under its proposed reforms, members could be exempted from minimum drawdown requirements, receive contributions into a single account as they dip in and out of the workforce at retirement age, and receive tax-free earnings.
Retirees are required to draw down a minimum percentage of their balances each year, depending on their age. At 65, for example, members must withdraw 5 per cent of their super balance either as an income stream, lump sum or both. This rises to 14 per cent at 95.
Cbus also argued funds should be allowed to contact members drawing the minimum to demonstrate that a higher standard of retirement living may be possible without impacting their pension entitlement.
“Rather than requiring a minimum drawdown for everyone, for small balances you remove that restriction,” Fok said. “We’re also suggesting the capacity to make contributions into that account under strict circumstances … so you don’t have to open up another account.”
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The Albanese government has shifted its attention to the retirement phase of superannuation more than 30 years after compulsory super was introduced by Paul Keating, with the industry also recognising it needs to lift its game.
A joint Australian Prudential Regulation Authority and Australian Securities and Investments Commission review last year found there was a lack of urgency by funds in developing retirement income strategies to improve long-term outcomes for their members.
“Australians contribute to their superannuation for many years in anticipation of financial wellbeing in retirement,” ASIC commissioner Danielle Press said at the time.
“Trustees must get the fundamentals right – their retirement income strategies must be designed with consumer needs in mind and be evidence-based. They need to be mindful that their members’ needs evolve over time and commit to continuously monitoring and improving their approach.”
In its submission to the Treasury review, AustralianSuper wants funds to be allowed to set up “accounts for life” for customers and help them apply for the age pension, while Aware Super said governments should focus on giving people as much control as possible over their retirements.
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