Trustees Must Join Forces to Promote Stronger Superannuation Reforms

(March 29, 2011) — The Australian Institute of Superannuation Trustees (AIST) has urged delegates, representing the $450 billion not-for-profit superannuation sector, to support greater unity on superannuation reforms.

“It’s fair to say that all sectors of the industry have reform fatigue but if they don’t think we need reform they are deluded. We still have an $18 billion ‘lost super’ problem, 33 million accounts for 11 million workers, no mandated data standards, and rollovers that are so difficult that members simply give up…and that’s just the tip of iceberg,” AIST CEO Fiona Reynolds said in a statement of her opening address to Conference of Major Superannuation Funds (CMSF).

As part of the reforms, the Government plans to introduce a default superannuation product called MySuper and will implement a variety of measures known as SuperStream in an effort to improve back office capabilities and improve confidence in self-managed super funds. Meanwhile, AIST aims to launch a public campaign to foster support for the Government’s plan to lift the Superannuation Guarantee from 9% to 12%. The Government promised the increase following its decision to introduce a resource industry super profits tax.

“While independent polling consistently shows that an overwhelming majority of Australians support 12% superannuation, we still need to convince all members of parliament to recognize this,” Reynolds stated, adding that it has taken years to get 12% on the political agenda. “We can’t afford to lose this opportunity to deliver a better retirement for millions of Australians,” she added.

Last month, research by Chant West showed that Australian superannuation funds gained ground in January as US share markets continued their strong run. According to the research, the median growth superannuation fund gained 1% return in the month of January, bringing the total returns for the financial year-to-date up to 8.4% since July, 1 2010. “The strong performance in overseas share markets during January was largely fueled by stronger than anticipated economic data in the US, together with some company profit results that exceeded expectations,” said director Warren Chant of Chant West, a superannuation research consultancy firm. “While sovereign debt issues are still an underlying concern in Europe, markets there have also had a strong start to the year.” Chant further indicated that in Australia investors have yet to see the full impact of the recent floods and cyclone on shorter term growth, inflation and interest rates. However, he said he doesn’t expect there to be a major impact on longer term growth.

The gain with Australian growth funds came from strong overseas share markets, with particular strength in the US, according to Chant West. As a result of the depreciating Australian dollar, international shares gained just 2% in hedged terms, compared with 5.3% in unhedged terms.