The nature of the sole purpose test might require superannuation funds to consider splitting their businesses to separately deal with accumulation and post-retirement.
A Super Review roundtable held during the recent Conference of Major Superannuation Funds (CMSF) was told by Equip Super executive, Geoff Brooks that many superannuation funds were not currently structured to deal appropriately with members in the retirement phase.
“Have we come to a time when super funds split and you have a retirement element,” Brooks asked. “Is the sole purpose test appropriate [with respect to retirement]?”
“Should it [the sole purpose test] apply in post-retirement and is a separate structure warranted?”
Parametric managing director, research, Raewyn Williams argued that the industry should not have left it to the Government to set the pace on dealing with the post-retirement settings.
“I find it somewhat disappointing that we are here years and years after we’ve talked about it,” she said.
“We’ve known about members getting older for a long time and now we are at a point where members don’t have good retirement solutions,” Williams said. “A better outcome for the industry would have been that we got on to it sooner and self-determined outcomes for our members rather than waiting for the Government to intervene.”
“If you wait for Government to intervene it’s a second-best outcome at best,” she said.
Australian Institute of Superannuation Trustees (AIST) chief executive, Eva Scheerlinck agreed with Williams that more needed to have been done but pointed out that one size did not fit all.
“We have 225 APRA funds around and everyone is different,” she said.
Willis Towers Watson’s Nick Callil said that he believed the Treasury was now looking at a bigger picture than simply product, including a retirement covenant.
“I think we are talking about a framework rather than product,” he said.