The chief executive of the Association of Superannuation Funds Australia (ASFA), Philippa Smith is in no doubt what the big issue will be for 2005 — Choice!
“It will be a case of choice, choice and more choice,” she said.
But Smith sees the implementation of choice of fund as providing opportunities for the industry as well as challenges, not least because it will provide a forum within which organisations such as ASFA can reinforce the benefits of superannuation.
“While we see choice dominating the industry this year, we also see it as an opportunity to better explain the benefits of superannuation — something which we’ve also been doing with respect to the operation of the co-contribution regime,” Smith said.
But while ASFA is likely to be busy dealing with the minutiae of choice and trustee licensing by the Australian Prudential Regulation Authority (APRA), it does not expect 2005 to be a significant regulatory reform year in the same fashion as 2004.
“We don’t expect it to be a year of major reform,” Smith said. “But, nonetheless, we will be taking the opportunity to push a number of issues, not least the position of women in superannuation and the need to lift contribution levels and apply the 9 per cent superannuation guarantee irrespective of the exclusion for those earning less than $450 a month.
“We have to find ways of raising contributions above 9 per cent a month and we need to remain vigilant in the choice environment so that people are encouraged to maintain the level of their contributions rather than cashing out amounts more than the 9 per cent,” she said.
On the central issue of choice, however, Smith believes that much work remains to be done in terms of how it is implemented and how it will impact on individual funds.
“There are a number of emerging issues relating to this, including the administrative flow from a fund’s perspective. There is a lot of detail that needs to be worked out about what has to happen, not to mention the issues of disclosure and insurance,” she said. “A lot of implementation and education issues need to be worked through.”
She said the implementation of the APRA licensing regime was also an issue for a number of funds, particularly with respect to the development of appropriate risk management plans.
