The Federal Government’s Stronger Super announcements today are a welcome step forward in the reform rollercoaster the superannuation industry is experiencing, according to superannuation expert, Mercer.
Mercer’s Managing Director & Market Leader for Australia/New Zealand, David Anderson said, “We are pleased to see progress with the Stronger Super reforms and to have some clarification around the future reform opportunities and challenges that face super funds and members.”
Pricing of MySuper products:
“Confirmation that larger employers will retain flexibility under MySuper will ensure market competition continues to generate greater value for members through continued access to tailored products,” said Mr Anderson.
“Now we have some certainty around MySuper pricing, large employers have an opportunity to review their superannuation arrangement and design the most appropriate insurance and retirement savings products for their workforce.
“This ability to tailor to the demographics and needs of a workforce is critical in achieving the fairest and best results for members,” he said.
“We are pleased to see lifecycle investment options can be used as the single investment strategy for a MySuper product. Mercer believes superannuation providers and the Government have a responsibility to create a landscape that encourages people to think about retirement savings as a ‘for life’ endeavour, not just for a person’s working life. Lifecycle investment options that span all stages of a person’s life, pre and post retirement, are an essential step to achieving this,” Mr Anderson said.
Transition to MySuper:
From 1 October 2013, employers must make contributions for employees who have not made a choice of fund that offers a MySuper product in order to satisfy superannuation guarantee requirements.
“This timing is tight. Early action from super funds and employers to prepare for this will mean the difference between realising the opportunity, only scraping through to meet the regulatory requirements or losing market share,” said Mr Anderson.
“Stronger Super is the most significant reform bundle the industry has seen since the introduction of compulsory superannuation, nearly 20 years ago. Mercer has been closely involved in the consultation between industry and Government and we are very pleased to see the process moving forward with sensible, constructive and fair proposals,” said Mr Anderson.
“Super funds need to consider strategic, operational and member engagement issues and ask what the gaps are between where they are now and where they’ll need to be.
“Industry reform is inevitably complex and challenging, but if it leads to likely better outcomes for members and improves the efficiency of the system, then it is worthy of the effort. These latest proposals meet this test,” he concluded.
- How ready is your fund? Find out about Mercer’s Stronger Super Implementation Road Map (PDF)
- The Australian Government’s Stronger Super Information Pack
Mercer is a global leader in talent, health, retirement and investments. Mercer helps clients around the world advance the health, wealth and performance of their most vital asset – their people. Mercer’s 20,000 employees are based in 43 countries and the firm operates in over 140 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 55,000 employees worldwide and annual revenue exceeding $12 billion, Marsh & McLennan Companies is also the parent company of Marsh, a global leader in insurance broking and risk management; Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a global leader in management consulting. Follow Mercer on Twitter @MercerAU @MercerInsights