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Introduction
I would like to acknowledge the Gadigal people of the Eora Nation as the traditional Custodians of the land on which we gather today.
I pay my respects to their Elders past and present, and I acknowledge any First Nations Australians in attendance today.
Thank you to Colin and the team at Conexus for the opportunity to share a few words today.
Superannuation is a promise to workers.
A promise that savings will be preserved through working life.
Will be invested and managed in the best financial interests of workers.
And will ultimately deliver income for a dignified retirement.
It’s a promise that the Albanese Government is committed to seeing the system deliver.
It is why we are seeking to legislate the Objective of Super.
Why we have extended and improved the annual performance test.
And why we are committed to ensuring members have access to the advice and information they need in retirement.
An added benefit of the superannuation system is its ability to distribute affordable life insurance at scale.
Around 5.7 million Australians rely on the default life insurance coverage provided by their superannuation trustee.
Many workers in dangerous jobs could not afford insurance any other way.
And as a safety net, insurance makes a similar commitment to workers.
That they will be looked after when retirement plans are disrupted or brought forward by injury or illness.
For many, insurance is rarely front of mind.
At least, not until something unfortunately goes wrong.
But in those moments, workers expect that the promised financial support will be delivered.
And that the process to receive that support will be simple and painless.
In fact, when things have gone wrong, the last thing you want is a painful and protracted process.
Yet when the insurance process breaks down for workers, it shapes their perception of the whole superannuation system.
Members don’t see 2 separate systems.
And they won’t accept their super fund shifting the blame.
So if we are to ensure the superannuation system delivers on its promise.
Then addressing the role of insurance in super is integral.
Data trends for insurance in super
The superannuation system is a success story that is both good for the economy and good for workers.
As it inches towards a size of $4 trillion, the world’s fourth‑largest retirement savings pool is no longer a cottage industry.
Members are now retiring with around $200,000 in savings on average which is making a meaningful impact on retirement living standards.
And it provides a pool of capital that strengthens our economy while delivering excellent returns to members.
The system has at times been battered politically.
Many have suggested using the retirement savings of workers on ideas that are not good for workers or for retirement savings.
Super for housing is an example of a policy that is bad for superannuation and bad for housing.
It won’t see a single new home built, but will increase demand.
That’s only going to have one impact on house prices, with some estimating an increase of up to $75,000.
All while draining retirement savings.
An important defence against these bad ideas has been the community support for the promise of a strong superannuation system.
That support should not be taken for granted.
And that support can be undone by overlooking weaknesses in the system.
The top issue raised in complaints to the Australian Financial Complaints Authority about superannuation over the past 3 financial years related to delays in claims handling.
The impacts of these delays should not be understated.
Members making a claim are often experiencing a period of stress and vulnerability as they respond to a significant life episode.
The last thing they need is a fight to make ends meet.
AFCA see common reasons for delay –
Members receiving incorrect information and unclear application processes being straightforward issues that should be addressed urgently.
And funds should not assume a one‑size‑fits‑all approach, but tailor their approaches to individual members.
But AFCA has also called out a lack of trustee oversight.
And questioned whether trustees are resourcing this aspect of business operations appropriately.
It may be appropriate to engage an external insurer.
However, the responsibility for a good customer experience cannot be outsourced.
Members just won’t stand for it.
They will hold the superannuation fund accountable.
And a good customer experience will increasingly shape the ongoing community support for the superannuation system.
Other trends in the member experience
With over 5 million Australians at or approaching retirement in coming years funds need to be ready.
The regulators – APRA and ASIC – published their second report on the implementation of the Retirement Income Covenant earlier this month.
Pleasingly, there has been improvements since last year.
However, there is still work to be done.
There is only incremental progress in measuring and tracking the success of retirement income strategies.
Strong performance through accumulation is necessary.
Yet effective drawdowns in retirement are the second half of a good retirement system.
And this means members need both the right products and the right advice and information to lift outcomes.
So I encourage all trustees to engage with the report by the regulators and commit to action.
Scams is another area that needs attention.
The success of the superannuation system will make it an increasingly attractive target for sophisticated criminals.
The government’s world‑class approach to combatting scams is having success.
Annual losses to scams have fallen for the first time in 8 years.
The largest drop in losses since reports began.
Which is because of the strong actions the Albanese Government has taken.
However, scammers won’t give up.
And they will adapt their methods and their targets to prey on weaknesses.
There has been a gradual increase in the number of stories of people losing their retirement savings to scams.
This will continue if industry does not act.
One area of improvement would be to see funds lift their security standards around authentication processes.
I know that both the FSC and ASFA have been working to lift industry standards in this matter.
It’s a needed start.
As a rule of thumb, members will have the same security expectations of their fund as they do of their bank.
This means a lift in data security and verification practices that can improve scam and fraud resilience.
The problem may not be acute today, but it’s coming.
Government action
I have been working with industry on these concerns for almost 2 years now.
And pleasingly there has been a positive response.
Everyone gets the concern, but there is more to be done.
For its part, the government has heard the concerns raised by trustees and insurers on the legislative roadblocks to good customer service.
The financial advice profession and legal framework was abandoned by the previous government.
But we have a clear plan to fix this.
And have worked constructively with industry to ensure that it delivers for consumers.
Our first legislative package passed through Parliament earlier this month.
It shows that we’re committed to the task at hand.
And we will continue to develop the final legislative package with industry over the course of 2024.
So that we can expand access to quality affordable financial advice for the millions of Australians hungry for advice and information.
ASIC has also made this a key focus of its work with industry.
It recently published findings from its first phase of work into death benefits claims.
This is one of the most critical responsibilities for trustees to get right.
There are many factors impacting the time it takes trustees to process a death benefit claim.
Some of these factors are outside the trustee’s control.
But many are not.
And so it is vital that industry responds so that member needs are put first.
Conclusion
And I reiterate in closing that if members are not put first, it poses a systemic risk to the superannuation system.
Members will expect that their super is paid on time and in full.
They will expect to see good financial returns to investment.
And they will expect to drawdown on their savings in a way that lifts living standards.
But when one thread unravels, it affects the system as a whole.
That is why it is so important that we get the insurance in super piece right.
And so I challenge you all to lift the standards for the customer.
The government will do its part.
But we need to do this in partnership.
So that we can fulfil the promise of superannuation together.