Introduction
I would like to acknowledge the Gadigal people of the Eora Nation, the traditional custodians of this land, and pay my respects to the Elders past, present and emerging.
I reiterate the Albanese government’s commitment to the Uluru Statement from the Heart and a Voice to Parliament.
I acknowledge any First Nations Australians with us today.
I’m glad to be here in person this year and thank you to Colin and the team at Conexus for the opportunity to share a few words today.
Life insurance has been a longstanding feature of Australia’s superannuation system.
Historically, retail superannuation was typically delivered by life insurance companies.
For those fortunate to be covered under a public sector or corporate scheme, it was common for life and TPD cover to be offered alongside retirement benefits.
Then through the 1980s, life insurance increasingly became a feature of industrial agreements.
Eventually, the labour movement won the long battle to make superannuation a right for every worker.
And once it became compulsory, the superannuation system offered a new channel to distribute affordable life insurance at scale.
That mattered.
Many workers in dangerous jobs would not have been able to afford insurance any other way.
Then in 2013, the previous Labor government required MySuper products – the default products that hold the retirement savings of millions of Australians – to offer death and TPD insurance by default.
And now we have a new Labor government, that is determined to continue improving the super system for the people it serves.
At the start of the year, I outlined my vision for the superannuation industry.
One with a political consensus.
With strong performance.
And with a priority focus on members.
Political consensus
Even after all those years of making the case for superannuation, and the three decades the system has been in place, its objective is surprisingly still not settled in Australian politics.
No other foundational public policy has existed for so long without a clear and shared understanding of its objective.
That has consequences.
The last government unilaterally decided that super should become an ATM for every problem they couldn’t solve.
That will cost people thousands in the years to come.
And no sooner does one bad idea die off than another one rises in its place.
This is a direct result of a system that lacks an understood, shared and legislated objective.
We will address this.
We have proposed that the objective of superannuation is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.
In coming months, we will release draft legislation for consultation before introducing it to Parliament soon after.
Legislating the objective of superannuation will also clarify the task of those working in the superannuation system.
The trustees.
The advisers.
And, yes, the insurers.
With certainty about the policy direction, you can bring your full capability to build a better system.
Insurance in superannuation
In addition to its objective, superannuation provides many benefits.
Clearly, super and life insurance have an important connection.
Super provides the means by which life insurance can be distributed affordably and efficiently to millions.
Around 5.5 million Australians rely on the default life insurance coverage provided by their superannuation trustee.
Insurance can help members achieve a dignified retirement where they experience early retirement due to incapacity or interrupted work patterns during their working life.
But for insurance in superannuation to achieve its desired benefits, the insurance sector needs to lift its game.
Members have to come first.
Products have to be tailored to their needs.
They need to be affordable, because the premiums are paid from retirement savings.
And insurers need to pay out in a timely fashion for appropriate claims.
Based on information from the Australian Financial Complaints Authority – AFCA – insurance companies can do better.
According to most recent data, a third of all superannuation complaints relate to TPD and income protection.
Three of the top five types of superannuation complaints relate to insurance.
AFCA is receiving two complaints a day just for delays in claims handling.
For insurance to be a benefit of superannuation, the customer experience must improve.
Members have to be at the centre of the system.
Retirement Income Covenant
Today’s report from ASIC and APRA on the implementation of the Retirement Income Covenant shows that the work that needs to be done in the super sector is not just in the insurance space.
The Retirement Income Covenant was introduced from 1 July last year, and requires RSE licensees to have a strategy to help members in or approaching retirement.
The verdict after 12 months isn’t good.
Two of today’s findings stand out. There has been a lack of progress. And a lack of urgency.
Funds should know their members. That’s a basic expectation.
But the review finds that most funds have identified gaps in the information they need about their members.
The majority of RSE licensees cannot even properly assess the retirement outcomes provided to members.
Some have identified gaps in the assistance offered, but can’t spell out what they’re going to do about it.
We celebrate the successes of superannuation. It’s a great national achievement.
We also need to call out the absence of assistance where we see it.
So I am going to say this bluntly: service standards in the superannuation system need to improve.
Funds have to do better. And now.
Five million Australians are either retired or approaching retirement.
The average Australian is now retiring with over $200,000 in super.
And when the time comes to retire, there are huge decisions to be made about how to manage that money and get the most out of it.
Australians expect that their super fund will be ready to help them navigate it.
This latest report is on the back of ASIC’s report last December into complaints handling.
That report found that almost 20 per cent of funds failed to consistently respond to complaints within the mandatory 45‑day deadline, and that 80 per cent of funds were poorly set up to deal with systemic issues.
It also backs up some of the stories we have been hearing in the media.
Two widows recently told of the delays they separately faced in accessing their respective partners’ superannuation from their fund.
One went through 15 months of back‑and‑forth with the fund before finally accessing her late husband’s money.
Imagine it.
In the worst, most painful time of your life, having to bounce around the superannuation system, fiddling around with paper forms, sending emails without reply, spending long periods on hold.
And not knowing how you were going to make ends meet while waiting.
We’ve also heard about a fund letting 100,000 of its members down, by double‑charging them for fees in duplicate accounts.
It’s not good enough.
Members won’t stand for it. And neither will the government that I’m a part of.
Consumers first
Last year we got rid of a government that had left consumers to fend for themselves for nine years.
My top priority when I became a Minister was to put things right, and that has motivated all the work we have done, and all the work we have underway.
We're taking on scammers, with our new, world‑leading National Anti‑Scams Centre.
We’re fixing the mess in the advice sector, to make sure Australians can access useful, affordable financial advice.
We’re investing in mitigation projects in disaster‑prone areas, to put downward pressure on insurance premiums.
We’ve put stronger protections in place to help people avoid getting into debt spirals with payday loans and consumer leases, and we’re bringing in new laws to regulate buy now, pay later products as credit.
And we've done what the last government couldn’t do, and finally passed the Compensation Scheme of Last Resort, so that victims of financial misconduct can get long‑overdue justice.
This government is standing shoulder to shoulder with consumers, to make them informed, secure, and valued.
And we are doing that in every sector of the economy.
Conclusion
The superannuation system exists for its consumers. That is, for the fund members.
For ordinary people trying to save for a dignified retirement.
So I’m calling on the whole financial industry to unite behind a clarified purpose of the superannuation system.
And I’m calling on funds and insurers to lift expectations.
To lift standards.
And to lift outcomes for members.
They have to come first, second and third.
Nothing else matters nearly as much.