Super news for February 2024

AustralianSuper calls for simpler retirement system

AustralianSuper, the largest super fund in Australia with $316 billion in funds under management, says Australia needs a simpler and much more member-centric retirement system.

“Many AustralianSuper members are telling us that they want flexibility and simplicity in the retirement income system as they define what retirement looks like for them and have confidence as they enjoy this next stage of their lives,” AustralianSuper chief officer retirement Shawn Blackmore says.

In its submission to the government’s Superannuation in Retirement consultation, AustralianSuper suggested reforms to the system that include implementing an ‘account for life’, so that Australians can move seamlessly between work and retirement; and allowing super funds to automate Age Pension applications and integrate with a member’s superannuation savings.

“As the relationship between work and retirement evolves, many members are telling us they are struggling to navigate the complexities of a fragmented system, where the interplay of income from multiple income sources, be it from work, government benefits or private savings, is challenging to manage,” Blackmore said.

“Research suggests less than half of people apply for the Age Pension immediately when eligible, with many members missing out on their full Age Pension entitlement by delaying their application.”

ATO reminds SMSFs to keep good records

The Australian Taxation Office (ATO) has issued a reminder to self-managed super funds (SMSFs) to keep on top of their records, suggesting that this will be a focus for the regulator this year.

In the reminder, the ATO outlines the many benefits of applying good record-keeping habits, along with the simple fact that it is also a legal requirement.

The ATO says the benefits of good record keeping include:

• Making it easier to provide information to your SMSF professionals for independent audit and annual return preparation
• Helping reduce audit and administration costs
• Avoiding the risk of receiving administrative penalties, which are personally payable by each individual trustee or the corporate trustee of the fund.

“Remember, even if you use a super or tax professional to administer your SMSF, each trustee is still responsible for good record keeping,” the ATO says.

SMSFs account for 25% of all superannuation assets

The ATO has also released its latest statistical information for SMSFs, highlighting that SMSFs continue to account for a large proportion of superannuation assets at 25%, or $876 billion, in financial year 2022–23.

For the five years to June 2023 there were, on average, 24,000 SMSFs established each year and 13,800 wound up each year. Overall assets in SMSFs rose by 23% over the past five years, while the number of SMSFs increased by 9%.

Asset data is for the financial year 2021–22 and shows that listed shares continue to be the most popular asset in SMSFs, at 28%, followed by cash and term deposits at 18% and unlisted trusts at 12%.

Over the past five years average assets per member increased 20% to $780,000 while average assets per SMSF rose by 18% to $1.45 million.

The median age of all SMSF members at the end of last financial year was 62 while the median age of members of newly established funds in the 2021–22 financial year was 46 years.

ASIC outlines enforcement priorities in superannuation

The Australian Securities and Investments Commission (ASIC) has outlined the three main issues it will focus on with regards to super fund oversight in the year ahead.

These areas are member services failures; misleading conduct, including greenwashing; and failure to protect super balances.

“ASIC expects trustees to communicate proactively with members, deal responsibly with members’ money, and deliver good value for money. This is regardless of the phase of membership of the member,” ASIC deputy chair Sarah Court told the Connexus Super Chair Forum.

And on failures to protect super balances, Court emphasised that members should be able to have confidence that their retirement savings are not being eroded by unnecessary or inappropriate fees and charges.

“And that the products in which they are investing are designed to maximise retirement outcomes and sufficiently balance risk,” she said.

ASIC continues to be disappointed by auditors

In the quarter ending 31 December 2023, ASIC acted against nine self-managed super fund (SMSF) auditors whose conduct did not meet their required standards.

Five SMSF auditors were disqualified, two had their registration cancelled and two had additional conditions imposed on them.

ASIC’s concerns centred around auditors’ compliance with auditing and assurance standards, independence requirements, registration conditions, and for not being a fit and proper person to remain an SMSF auditor.

“SMSF auditors are responsible for auditing over 611,000 SMSFs with total estimated assets of almost $900 billion. In this privileged position, they play a key role in upholding the integrity and confidence of the SMSF sector. ASIC will continue to take action where conduct falls short,” ASIC deputy chair Sarah Court said.

Greg Combet to chair Future Fund

Greg Combet has been appointed as chair of the Future Fund Board of Guardians by the Albanese Government. He will take up the position mid-year when he relinquishes his role as chair of the Net Zero Economy Agency (NZEA).

The Future Fund is Australia’s sovereign wealth fund. The Board of Guardians oversees the management of the Future Fund, the Medical Research Future Fund, the Aboriginal and Torres Strait Islander Land and Sea Future Fund, the Future Drought Fund, Disaster Ready Fund, the DisabilityCare Australia Fund and the Housing Australia Future Fund. As at the end of 2023, the Board of Guardians managed a total $272.3 billion in those funds combined, with a return of 8% for the calendar year.

Combet has extensive experience in superannuation and financial services including serving as chair of IFM Investors and being a trustee of AustralianSuper and Superannuation Trust of Australia. He is a former Labor government cabinet minister and, before that, leader of the Australian Council of Trade Unions (ACTU). He replaces former Treasurer Peter Costello in the role.

When announcing the appointment, Treasurer Jim Chalmers said his appointment would bring deep, diverse experience and fresh leadership to the Future Fund.

The Government has appointed Ms Mary Reemst as acting chair of the Future Fund until Combet takes up the role.