2020 an opportune time to refine super system

From
Jonathan Steffanoni

Jonathan Steffanoni

Despite maintaining one of the most efficient and progressive retirement savings systems in the world, Australia should heed some lessons from overseas in 2020 if it’s to remain as pre-eminent in the years to come, according to QMV Legal partner, Jonathan Steffanoni.

Mr Steffanoni believes the velocity and breadth of change in the superannuation industry has been a challenge to many superannuation funds and industry professionals but, in order to continue as a global leader, the system needs to remain open to new ideas.

“It’s too easy to become narrow and focused in our perspectives and thinking but learning from developments abroad can only help the system to provide the best possible outcome to super fund members,” he said.

Following a recent trip to the UK to meet with regulatory and pension professionals, Mr Steffanoni said Australia shouldn’t rest on its laurels, and should take some informed guidance from the likes of the UK which, in recent years, rolled out auto-enrolment reforms.

Between 2012 and 2017, the UK extended coverage of default employer and employee contributions to most of the workforce. Contributions have risen from 3 per cent to 8 per cent of salary, with opt out rates remaining relatively low.

Mr Steffanoni believes the mandatory nature of the superannuation guarantee (SG) level has shifted the attention of Australian superannuation funds on to policy debates about the appropriate ‘minimum’ level of SG, rather than focusing on assisting members in setting an appropriate level of contributions based on their living expenses, projected future income, and goals for retirement.

“Many Australians assume that government calculated minimum level of savings must be enough. Giving individuals the ability to opt out can promote greater interest and involvement, which can also result in personally aligned decisions around the right level of contributions from savings for retirement,” he said.

The UK government also initiated a project in 2016 to develop a Pensions Dashboard, which will provide an online centralised view of all pension benefits and entitlements, which could prove beneficial to the Australian superannuation system if adopted in a similar form.

“The UK Pensions Dashboard will include detail of any government pension entitlements that an individual has, in addition to any occupational pensions.

“Obtaining access to information about government benefits and entitlements in a standard and secure format has been an ongoing challenge for superannuation trustees and financial planners in providing technology-enabled personal financial advice, so there are very possibly lessons to be learnt here,” Steffanoni said.

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