Super needs narrower focus

Although Australia’s superannuation system needs to evolve in line with changing demographics, it needs to stay focused on the funding of retirement incomes, according to Deloitte Partner Ian Harper. 

“The system does need to evolve to managing longevity risk and to integrate with the funding of age care,” he said. 

“Some of that will occur naturally as the transition occurs, but there may also be scope for some encouragement.” 

Harper said that although the system needed to make changes as the population shifted from accumulation to retirement phase, mandating asset allocation or subjecting the industry to onerous liquidity rules would lead the super system away from its main objective. 

Although there were good arguments for encouraging super fund investment in certain assets, funds often had legitimate reasons not to invest, according to Harper. 

Rather than mandating certain investments, Harper said policies such as incentivising the development of new products would serve the retirement savings system better. 

“We should go extremely cautiously in trying to make a superannuation system do all things for all people,” he said. 

“We would be much better served by a superannuation system that sticks to the main game and focuses on the funding of retirement incomes for Australians.”

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