Opening remarks on 21 November 2018 by the Chair of the Association of Superannuation Funds of Australia (ASFA) at the ASFA Conference, Convention Centre, Adelaide.
Good morning: Delegates, guests, partners, exhibitors – friends.
What a warm welcome to country ceremony we just heard from Chris Tamwoy.
What a year we are reminded of – as the opening video displayed! I know you will leave on Friday afternoon with great ideas, solutions, new and renewed contacts, but more importantly the knowledge that we need to do better as an industry.
Today there are over 1500 participants – the largest pensions’ event in the world. I welcome everyone to what will be an inspiring, thought provoking and educational three days.
Particularly I welcome our first timers and our many emerging leaders in the audience. You are our future.
I also welcome international delegates from 13 countries: China, Denmark, France, Hong Kong, Kingdom of Tonga, Kiribati, New Zealand, Papua New Guinea, Samoa, Singapore, Tuvalu, United Kingdom, United States of America.
Thank you to our commercial partners for this year’s conference. Without their support we could not stage an event like this. Please allow me to make special mention of our premium partners:
- LINK Group
- Bravura Solutions
- Oban Solutions
This Conference is a time for reflection about what we do; our priorities, values. It is a time for renewal.
Our industry does a good job. Mostly – actually, overwhelmingly so. I know what we do.
As we saw on the video, based on APRA figures, superannuation sees a massive, almost eye blinking-in-disbelief-like impact, every day.
It is what we do.
Superannuation is for the long term – a solution for the decades ahead.
Yet we know our superannuation system is at risk.
Although the ASFA retirement standard is the widely accepted benchmark for living expenses in retirement, we are a long way short of that for most Australians. Current balances on average are around $112,000 for men; $68,000 for women. That is a long way short of adequate. Especially, through broken work patterns, women’s balances are 40% less than men.
Therefore, it disturbs me to see so much complacency.
In the last twelve months we have slipped two places in the league table of world retirement systems based on adequacy, sustainability, and integrity
We need to put 12% back on the agenda.
We need to challenge the myths of the Productivity Commission draft report where, somehow, they calculate average employees saving $1.0m in retirement. Not in our world.
A few months ago ASFA published a paper criticising the Productivity Commission’s “analysis” that asserts that an average blue collar worker earning $50,000 a year at age 21 will be able to retire at age 67 with $1.2 million in today’s dollars, though with big differences in outcomes, depending on their fund. This is not right. According to ASIC’s MoneySmart calculators a very different long-term outcome is apparent. This methodology results in projected balances in today’s dollars of less than $300,000 for this example. An average blue-collar worker on $50,000 a year is more likely to have a superannuation balance at retirement of between $250,000 and $300,000. Still, this is a substantial amount that will make a big difference to his or her standard of living in retirement, but it is well below the Productivity Commission projected amount.
Since those erroneous calculations there have been calls from the usual suspects to cut back on super. “No need to go to 12%”, says Grattan Institute. This is irresponsible ideological nonsense or plain lazy, shoddy research. The impact of this confusion can be huge.
Every year is replete with upheaval, characterised by scrutiny from the regulators, government, and the broader community.
That forces us to think harder on the role and purpose of superannuation, particularly in light of four events that significantly impacted our industry this year: the Productivity Commission report, the Federal Budget, the ongoing Royal Commission, and the completion of the Insurance in Superannuation Voluntary Code of Practice. The Royal Commission, in particular, raised problems that need addressing.
The reviews highlight the need for vigilance regarding fees and costs, especially given the role fees play in eroding good retirement outcomes.
As an industry we are all impacted by negative stories in the media. This week there are superannuation Bills re-introduced in the Parliament that will strike at the principle of universal insurance cover.
I can assure you that ASFA is opposed to wiping out coverage for vulnerable workers.
We are opposed to substantive changes that add to cost, complexity, and strike at the principle of pooling.
We need to focus on the substantive issue of delivering better retirement outcomes.
At the heart of adequacy is the legislated commitment to move the Superannuation Guarantee contributions to 12 per cent, and the need to defend the role of insurance in superannuation. This must be an unrelenting focus.
Unquestionably, the biggest challenge we have is to restore the trust of the Australian public, regulators, and policy setters in our ability as an industry to deliver better, member-aligned retirement outcomes.
The community needs assured confidence. We owe it to the many pioneers of our industry as well as present generations and those to come to do a better job each and every year.
Pioneers like the late Paul Costello, who passed away last week, the founding chief executive of the Future Fund, the founding chief executive of NZ Super and the second-last chief executive of STA before its merger to form AustralianSuper, who was recently Chair of the Investment Committee of the Qantas Super, is someone we can honour by taking to heart the lesson that improvement is a ceaseless quest.
ASFA, in deep consultation with everyone in this room and beyond, will bring forward the evidence-based, hard thinking that ensures we are responsive – at all times – to the expectations and the standards that the community expects of us.
Our voices need to he to be honed and heard. This is the place, the Conference, to heed the lessons we need to learn, debate what needs to change in doing better.
I am delighted we are here in Adelaide, such a beautiful place, the city of churches, the smart city, where we get to enjoy the newest facilities of the Adelaide Convention Centre.
Now I welcome to the stage to give a welcome address from our host city, the South Australian Treasurer, the Honourable Rob Lucas.