The Financial Services Council has welcomed new government consultations, but cautioned against broad approaches to retirement policy.
The Financial Services Council (FSC) has welcomed the federal government’s consultations on Best Practice Principles for Retirement and the Reporting Framework for Retirement Data, calling them an important step in improving outcomes for retirees.
However, the industry body has urged policymakers to ensure that individual needs remain the central focus of national retirement policy.
“No two people’s retirements are the same and should not be treated as such by the government or superannuation funds,” CEO of the FSC, Blake Briggs, said.
“Retirement policy should focus on ensuring that people are given the tools to make decisions that steer them towards the kind of retirement they want, this includes access to guidance, financial advice and a range of products to help shape their futures.”
While the newly published principles reflect a greater emphasis on the retirement phase of Australia’s superannuation system, Briggs has called for the government to maintain its focus on individual outcomes.
“We are pleased to see Treasury’s framing of the principles starting to focus more on individual outcomes, which we think is vital to ensure people have choice when it comes to choosing their superannuation and empowers them to select investment strategies that align with their financial goals and personal values,” he said.
Moreover, the FSC acknowledged the importance of transparency in the retirement system, but has warned against extending the annual performance test to the retirement phase.
Briggs said that the test is unsuitable for retirement products because investment portfolios vary widely between individuals, making direct product comparisons problematic.
“Performance testing of retirement products would lead to adverse outcomes, given that retirement is personal and should not be treated uniformly,” he said.
Calls for reform from super funds on the annual performance test have been rife in recent months. Industry super Rest, for example, called for an overhaul of the test and warned that the current framework risks stifling investment in emerging industries critical to Australia’s future economy.
The FSC in June released research prepared by NMG Consulting, Empowered for Retirement: A Best Practice Framework for Superannuation Funds, which highlighted the need to engage superannuation customers throughout their working lives and into retirement.
According to the FSC, the framework emphasised personalised retirement outcomes, supported by guidance, education, and tailored financial advice.
The FSC has confirmed it will lodge a submission to the consultation process and will continue to work with the government to advance policies that improve outcomes for Australian retirees.
