The intense debate over changes to Australia’s $1.5 trillion superannuation system should serve as a clear indication to both sides of politics that super should not be up for grabs, the chief executive of Westpac-owned BT Financial Group said on Friday.
In an address to an American Chamber of Commerce luncheon in Sydney, Brad Cooper spoke about the future of superannuation, specifically its purpose, engagement and importance.
“Uncertainty is the enemy of long-term savings,” Cooper said.
“I believe that if the discussions of a few weeks ago made anything clear to all sides of politics, it was that super should not be up for grabs.”
Government, industry and employers had a role to play in the superannuation system to ensure it delivered for Australians, he said.
“Governments have to settle on a super regime that allows for a long-term economic policy framework, rather than responding to budgets and forward estimates,” he said.
“Organisations such as BT Financial Group, who are caretakers of Australian retirement funds, must acknowledge that the goal is for workers to live in retirement in the way they wish.
“We have emphasised the accumulation phase, but how many Australians are prepared to live in retirement? Are they advised? Do they understand longevity risk? Ensuring that end-to-end solutions are understood by members is something the fund managers have to do.”
He said employers had an opportunity to educate employees about their super savings.
“The super guarantee payment of 9 to 12 per cent is a cost to employers, but its introduction is gradual and in many cases will be absorbed into regular wage costs,” he said.
“The opportunity is for employers to be clear with employees and help them understand this is their money, part of their wages package and money they need to monitor and protect.”
Another factor key to superannuation was the engagement of members, he said.
“They will hold everybody in the system to account and that’s a good thing,” he said.
“There are challenges to be addressed, such as those with low incomes and low balances. In order for the system to make sense, this end of the spectrum will have to be addressed continually.”
He said regardless of what financial challenges were facing today’s government, in 20 years the challenges would be worse if Australia did not create an adequate savings system.
He said by 2033, Australia would have more than 27 million people, with more than one-quarter of the working-age population at that time over the age of 65.
“We not only need a framework – as a country we need to understand what our superannuation system is trying to and needs to achieve long term. Australians and the future economy need that clarity,” he said.
Earlier this month, the federal government announced its planned changes to the super system ahead of the budget.
By Kate Kachor of the Financial Observer.