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Super funds walk the line between fight or flight as Australians prepare to vote

In the war of words in the lead up to an Australian federal election, super funds are often political collateral damage. Keeping out of the fray is smart, they say, but making a stand is just as important.
Super funds walk the line between fight or flight as Australians prepare to vote

As Australians head to the polls for federal elections on May 21, the campaign is emerging as one of the few in recent memory that has not used superannuation as a political football.

However, advocacy groups that spoke to AsianInvestor said the best approach when it comes to elections is to stay out of the fray.

"Incoming governments have a tendency to remember advocacy by groups and that can impact future engagement," one group spokesperson said.

While superannuation may not be front of mind as the nation goes to the polls, the Australian Institute of Superannuation Trustees (AIST) is nonetheless calling for all election candidates to declare their ongoing support for the A$3.4 trillion ($2.4 trillion) compulsory super system.

AIST has called on the federal government to improve the fairness, adequacy and transparency of the retirement savings system.

“Voters might not have super on their mind as they cast their ballot, but it’s a major driver of their quality of life in retirement, and we’re determined to make sure it gets attention during the campaign,” AIST CEO Eva Scheerlinck said in an official policy statement. 

“We’ve seen the major parties focus on immediate financial issues such as household budgets and the rising cost of living as they compete for the votes of Australians, which is understandable, but super also affects hip pockets after people leave the workforce.”

AIST has recommended, among other things, that the government should extend superannuation to paid parental leave. The opposition Labor Party recently abandoned its own long-standing pledge to pay super on parental leave, a move that was criticised by the super industry.

TOWARDS GENDER PARITY

In addition, AIST wants to see political parties commit to action on the “shameful” gender gap, that sees women earning less than men throughout their working lives, then retiring with 40% lower super balances.  

“I also ask they support our call for the government – old or new – to assess the impact of the financial coercion of women in 2020’s pandemic early release of super scheme, re-commit to the increase in the Superannuation Guarantee to 12% by 2025, and extend the ‘Your Super, Your Future’ performance test to all APRA-regulated superannuation products,” Scheerlinck said.

Irrespective of who is elected to run the country on May 21, Scheerlinck said "plenty remains to be done to ensure all Australians have the long-term financial stability and dignified retirement they deserve, regardless of their gender, culture, education or socio-economic background.”

Graeme Russell, chair at and a former CEO of MediaSuper believes that "first and foremost, we need a government that will stop attacking and undermining industry super funds - under the guise of ‘members interests’ - simply because they don’t like the involvement of trade unions, or the way that industry funds hold the managers of capital to account," he told AsianInvestor.

"I have no issue with requiring seriously under-performing funds to pursue solutions, including mergers, to address that problem. But the cost to members of their funds having to comply with purely philosophically motivated regulatory change has been massive. It’s just not right."

The current Australian government has been out of step with global pledges on climate change and sustainability. The Responsible Investment Association of Australia (RIAA) is calling on them to set in train a national sustainable finance strategy - such as has been seen in Europe - that would enable Government agencies and the finance sector to successfully work together.

RIAA's CEO Simon O'Connor told AsianInvestor he believes such a strategy would help to unlock private capital towards low carbon investments, "to more fully consider ESG issues, from human rights, biodiversity, to first nations people rights. It would ensure the finance sector is aligned with Australian consumer preferences for greater consideration of sustainability in their pensions and investments."

TAX DISTORTION

Russell believes that governments need the courage to reduce the excessive tax advantages for high balance super accounts.

"The federal budget deficit is unsustainable, and the funding to address that problem has to come from the excessive tax advantages enjoyed by well-off boomers like me."

At the Monash Business School superannuation investment strategy online discussion last week, panellists were asked what they would want to see from the government to ensure that Australia remains economically prosperous.

Stephen Anthony, senior advisor at the Monash Centre for Financial Studies was quite clear: “I think the most important thing is vision and honesty. Since the mining boom, it’s very difficult to think of examples where governments have sought to engage the community with welfare-enhancing reforms.

"There were so many dollar bills on the path (of the commodities boom) but we’ve somehow managed to find a situation where both our political parties (Liberal and Labor) are afraid to really lead us and to show what their vision for the future is."

This was not just a statement about the calibre of the politicians, said Anthony, but a reflection of a loss of community.

"I think we need to consider why that is, and move together as one community to direct policy back to the main aim of generating common prosperity for all," he said. “Our super funds have always been part of that story and I hope they continue to be."

¬ Haymarket Media Limited. All rights reserved.
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