Super news for November 2023

In separate proceedings, ASIC has commenced civil penalty proceedings in the Federal Court alleging TelstraSuper failed to comply with internal dispute resolution requirements. 

The regulator alleges that 40% of TelstraSuper’s responses to complainants during the 22 October 2021 and 13 January 2023 period did not comply with its own dispute resolution procedures.

During that time frame, TelstraSuper received 337 superannuation complaints, but ASIC alleges it failed to comply with notification requirements when it did not respond to 106 complainants within 45 days; nor inform 85 complainants about why there was a delay in responding to their complaint; nor inform 22 complainants about their right to take their complaint to the Australian Financial Complaints Authority (AFCA).

“ASIC expects the financial services industry to have effective dispute resolution procedures in place and, importantly, to have the systems and resourcing to ensure they are being put into practice. Financial service providers need to prioritise dispute resolution procedures to properly protect consumers,” ASIC deputy chair Sarah Court said.

Push to expand financial advice in super

The government will release technical and legislative detail around the provision of financial advice within super funds in the first quarter of next year.

“The lack of advice and information around retirement incomes is clearly the biggest gap in the advice market,” Assistant Treasurer and Minister for Financial Services, Stephen Jones, told the AFR Super and Wealth Summit 2023.

“And so, the government has committed to expanding the role that superannuation funds will play in providing personal financial advice.”

Jones said the government has engaged in deep consultation around the scope, training and competency, and charging arrangements for advice to be provided within super funds.

AustralianSuper lifts stake in Origin Energy

AustralianSuper boosted its stake in Origin Energy (Origin) to 15.03% after announcing it would be voting against the takeover scheme from the Brookfield and EIG-backed consortium on the terms proposed in Origin’s scheme booklet.

AustralianSuper said the offer from the consortium remains substantially below its estimate of Origin’s long-term value.

“AustralianSuper believes the ongoing energy transition, as we move towards net zero by 2050, has further enhanced the value of strategic energy transition platforms, such as Origin, whether public or private,” a spokesperson for the fund said in a statement.

The fund believes Origin has a highly strategic portfolio of assets to participate in, and benefit from, the energy transition.

Median super balances still less than optimal 

The Association of Superannuation Funds Australia (ASFA) has released new data on super balances required at certain ages, for certain salaries, for Australians to achieve a comfortable retirement, as determined by the ASFA Comfortable Retirement Standard.

ASFA said that the analysis indicates that those on a wage of $90,000 would require 35 years of Superannuation Guarantee contributions at 12%, while an individual on $65,000 a year would need 45 years of 12% contributions to be able to enjoy a comfortable retirement.  

The required balance for a 60-year-old on a salary of $65,000 to achieve a comfortable retirement is currently around $444,000. However, the current median super balance for a 60-year-old male is $204,000 and for a 60-year-old female just $148,000.

“A key reason for the retirement savings gender gap is women taking time out of the workforce, or working reduced hours, to have and raise children,” ASFA deputy chief executive officer Glen McCrea said. 

“Compulsory super should be extended to paid parental leave (PPL), including the government’s PPL scheme.” 

Rapid growth in funds management industry

Australia’s funds management industry grew 13% to $4.31 trillion in funds under management (FUM) between June 2020 and September 2022, according to the latest Financial Services Council (FSC) State of the Funds Management Industry Report prepared by KPMG.

But the FSC points out that just 6.5% of overall FUM in Australia is sourced from overseas. That is miniscule compared to 78% in Singapore, 90% in Ireland and 95% in Luxembourg.

“Australia has a globally sophisticated funds management industry, with low fees by global standards, but is missing out on the opportunity to manage offshore due to regulatory and tax policy settings that fall short of international peer comparisons,” FSC chief executive officer Blake Briggs said.

The report also found that there are 647 fund managers operating in Australia, 560,000 people employed in Financial Services and 6,451 products offered by fund managers in Australia.

ACSI welcomes government’s Sustainable Finance Strategy

The government has released a consultation paper on its Sustainable Finance Strategy and is asking for submissions with a closing date of 1 December this year.

The paper, and its focus on reforms that will support investors in driving long-term returns, was welcomed by the Australian Council of Superannuation Investors (ACSI).   

Treasurer Jim Chalmers said the strategy was all about mobilising the significant private capital required to achieve net zero, modernising financial markets and maximising the economic opportunities associated with energy, climate and sustainability goals.

“A comprehensive sustainable finance strategy will support markets in preparing to meet the challenges and opportunities of the next decade and strengthen markets as we make the transition to a low carbon economy,” Louise Davidson, ACSI chief executive officer, said.

ACSI also welcomed the focus on investor stewardship in the consultation paper.