As the FY 25/26 year comes to an end, General Manager, Ian Fryer shares his thoughts on what's been happening, and what lies ahead for the industry.
It’s been another big year for super, with some important changes about to hit the industry.
On 1 July, the Division 296 tax kicks off and will hit those with super balances over $3 million. On the same day, payday super commences which will require employers to pay super at a similar time to salary and wages.
While we regard both changes as positive, they are not simple to implement. We'll see how super funds, administrators and employers go, but we expect some teething issues.
In the Federal Budget, we had the Capital Gains Tax changes that for many may tilt the balance back in favour of investing through super. The changes also open the door for older-style products like investment bonds which have largely been neglected for many years. We've been researching these products for some years now and they do offer a lot for the right investor.
Looking back over this financial year, the Shield and First Guardian collapses loom large. These collapses have shone the light on platform governance. We affirm the role of platforms in our industry to provide choice and adviser efficiency, but the role of super platform trustees in governing the investment menu had to be uplifted – and this is now happening.
Risk management has been under the microscope in several funds and has been the cause of some licence conditions imposed by APRA. This function is becoming more and more complex as the range of risks for super funds just keep growing. Cyber risk is a high profile example as we see more cyber events occurring across many industries. We now believe that external verification of cyber maturity should become the norm, just like it is with the external audit of financials. Our technology, governance and risk management must reflect the size and importance of our industry - there's too much at stake for our members’ savings!
Insurance in super is still problematic. For about 10 years, many of us have been saying that TPD is broken, but it's been made blindingly obvious with the rise of mental health TPD claims. We believe insurance in super needs to change. Indeed, whenever we assess the insurance offer of super funds from now on, we will increasingly reward funds that do something other than pay massive lump sums of default death and TPD. Our patience has run out and member outcomes are being impacted! Insurers have some great solutions in this space – now is the time for funds to move forward!
And finally, there's retirement. Last year we launched the Epic Retirement Tick with Bec Wilson and recognised six funds that met our standard of helping their members navigate their way from accumulation to a great retirement solution. Since then, we've met with many funds and have been encouraged by their progress and plans. We look forward to several funds making big advances in their retirement offering when we re-assess in September.
As has been recognised many times before, it’s no use just having a great super system for when people are saving. We need a great retirement system that provides what members need when they start to take out their income – because that's the whole point of the system!
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