Super news for May 2021

Only one in eight (13%) added it to their savings and 15% used it to pay credit card or personal debts.

“We found that for people who accessed the scheme twice, the average total amount withdrawn was $17,441. The average single withdrawal was $7,728 for the first opportunity, and $7,536 for the second,” ABS director of household economic resource surveys Dean Adams said.

The ABS also reported that average private household income, including earnings from jobs, investments and superannuation, was stable in real terms in September 2020, compared to September 2019, at $2,117 per week.

Nearly one in five (19%) of households had someone receiving the JobKeeper payment either through their employer or their own business.

Your Future Your Super changes

Of the 77 MySuper products currently available, Treasury has estimated that as many of 21 of these products are underperforming. These products held over $100 billion in assets across 3 million accounts and charged $1.2 billion in fees annually.

Treasury gave this response to a question on notice to the Senate’s Economics Legislation Committee inquiry into Treasury Laws Amendment (Your Future Your Super) Bill 2021 around concerns that members would be stapled to an underperforming fund as part of the new legislation being considered.

Treasury also stated that funds that underperformed under the new legislation would be required to inform their members (something they are not required to do under the current system).

The government also announced some changes to the original proposals that will mean administration fees will be included in the performance test. This will ensure “that the test focuses on the final member outcome and is consistent with information presented to consumers on the online YourSuper comparison tool”, Senator Jane Hume and Treasurer Josh Frydenberg said in a joint statement.

In response to industry criticism of its exclusion, the government also added Australian unlisted infrastructure and unlisted property as specific asset classes covered by the performance test.

This was welcomed by industry bodies such as the Association of Superannuation Funds of Australia (ASFA).

“Australian superannuation funds’ strategic asset allocation, including the significant allocation to unlisted investments, has been an important element in their outperformance compared to international peers,” ASFA chief executive officer Martin Fahy said.

“The changes announced … have the potential to mitigate investment distortions foreshadowed by the industry when the benchmark was first announced.”

Government to regulate proxy advisers

Minister for superannuation, financial services and the digital economy Jane Hume and treasurer Josh Frydenberg have jointly announced they will move to increase the accountability and transparency of proxy advisers.

Proxy advisers provide research to shareholders, such as institutional investors and superannuation funds, on listed companies around resolutions companies put forward at company meetings.

Treasury consultation will consider requirements that such companies obtain an Australian Financial Services Licence for the provision of proxy advice and that they provide their research and voting recommendations to the company that is the subject of their report at least five business days before providing it to their clients.

Proxy advisers have suggested that the proposals are “an attack on free speech” and superannuation funds have said that there would be an extra cost to their fund, which would ultimately translate into higher fees for members, if they were required to do this kind of research themselves.

New aged care help service

Mercer has just launched Care & Living with Mercer (CaLM) designed to help Australians plan, implement and monitor arrangements for their ageing care needs. 

The service will be offered via institutions, such as employers or super funds that sign up with Mercer. Their employees or members can then access the service through a portal where they will be asked a series of questions. They are then provided with a personalised roadmap, which suggests steps they can take. There are also higher levels of service, including a Care Concierge, which can be engaged on a fee-for-service basis.

“Navigating the system and finding a trusted source of reliable, accessible and independent information is proving more difficult than it should be. Australia needs to be innovative in how it supports people as our society rapidly ages,” Mercer’s leader of retirement innovation and care & living with Mercer, Will Burkitt, said.

FSC focus on affordable and accessible advice

The Financial Services Council has released a 70-page Green Paper – called Affordable and Accessible advice: FSC Green Paper on financial advice – in order to lead policy debate on a restructure of the financial advice industry in Australia.

“The financial advice industry is facing significant challenges, with rising regulatory requirements and cost pressures undermining the economics of the sector,” FSC chief executive officer Sally Loane said when releasing the paper.

“The burden of compliance is doing nothing to help consumers; it’s actually putting advice beyond the means of average Australians and driving advisers out of the sector.”

The FSC proposals include realigning and simplifying the definitions and classifications of financial advice and removing the safe harbour steps and using the Code of Ethics as the single tool to meet the Best Interests Duty.

FSC have also recommended abolishing the Statement of Advice in favour of a scalable Letter of Advice, which they believe would better align documentation and disclosure requirements with consumer needs and the level of risk.