The Association of Superannuation Funds of Australia (ASFA) has suggested that the Federal Government emulate the United Kingdom by legislating to allow superannuation funds to provide members with projections of how much their superannuation is likely to amount to in retirement.
The ASFA suggestion comes at the same time as there has been open disagreement between the industry funds movement and Sydney-based analyst, Warren Chant, over the use of so-called “net benefit to members” calculations.
ASFA earlier this month made a submission to a Parliamentary inquiry into improving the superannuation savings of people under 40 and on Monday chose to highlight those elements of the submission dealing with estimated projections arguing that a general lack of information is inhibiting retirement savings.
It cited the experience in both the UK and Sweden and said that in the UK there was an obligation on funds to provide annual benefit projections to members.
“The UK legislation governing this dictates that the pension illustration by prepared ‘in real terms’, allowing a direct comparison on the projected outcome given the member’s present day income, and the cost of living. Most elements of the calculation are prescribed,” ASFA chief executive Philippa Smith said.
“The Government can help to foster a savings culture in Generations X and Y by instigating reforms that would allow super funds to provide benefit projections — based on standard assumptions — to their members as part of an annual statement,” she said.
