‘Help Give Retirees Peace of Mind’: Reforms Unveiled for Greater Superannuation Flexibility, Transparency

Australian Treasurer Jim Chalmers at Parliament House in Canberra, Australia, on May 15, 2024. Tracey Nearmy/Getty Images

Older Australians will soon have more flexibility and transparency in managing their retirement savings, as the federal government introduces a series of reforms aimed at enhancing the superannuation system.

“I am announcing a new package of reforms that will help give retirees peace of mind, help them make their super go further and provide more support to navigate retirement,” Treasurer Jim Chalmers said in his address at ASFA National Conference held in Sydney on Nov. 20.

The reforms focus on four key areas: independent guidance, better retirement products, best practice principles for the industry, and increased transparency.

4 Key Reforms

Enhancing independent guidance for retirees is the first key reform.

The government will invest in expanding the resources available on Moneysmart, ensuring retirees have easy access to reliable, independent information on retirement options.

The second focus is on improving retirement products. The government aims to tighten regulations on innovative income streams, encouraging super funds to offer features like money-back guarantees and instalment payments, providing members with greater flexibility and choice.

The third reform establishes voluntary best practice principles for the superannuation industry, specifically regarding retirement products.

These principles will guide the industry in developing modern, high-quality retirement products that ensure financial security for Australians as they enter retirement.

The fourth component of the reform package is a new reporting framework for retirement outcomes.

Starting in 2027, this framework will offer retirees greater transparency, providing clear insights into how their super products are performing.

It will also create a shared understanding of success in the retirement phase, helping members track their progress and make adjustments if necessary.

To ensure these reforms are effectively implemented, the government has tasked the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) with conducting a Pulse Check report by the end of 2025.

This report will monitor trustees’ progress in meeting their obligations, ensuring the reforms lead to tangible improvements in retirement outcomes.

“These reforms will work in tandem with the government’s Delivering Better Financial Outcomes package. We will consult on the changes in detail next year,” Chalmers said.

Superannuation Drawdowns: Key Statistics

Over 2.5 million Australians are expected to retire within the next decade.

Within 20 years, most retirees will have accumulated superannuation at a rate of 9 percent or more annually throughout their working lives.

As superannuation drawdowns are expected to rise from 2.4 percent to 5.6 percent of GDP over the next 40 years, Chalmers noted the growing importance of retirement plans as Australia’s population ages.

ASFA’s Response to the reforms

ASFA welcomed the reforms, specifically the focus on improving consumer education and guidance, which will help increase fund members’ engagement with their super.

“Improving consumer education is key to helping Australians make informed decisions about their retirement,” said ASFA CEO Mary Delahunty.

“Clearer guidance and tools like Moneysmart will empower fund members to engage more actively with their super, ultimately leading to better retirement outcomes.

“Super funds have shouldered a lot of the responsibility for educating Australians—we welcome an increased effort from the government in this area because it is so important in helping people make good decisions.”

She added that ASFA is pleased to see the government’s commitment to ensuring tangible retirement outcomes for Australians. She also extended her support to work closely with the government to implement them.

Call for National Retirement Income Strategy

Meanwhile ASFA, has called on the federal government to create a National Retirement Income Strategy.

The strategy would define the primary purpose of the retirement income system and set a long-term vision for life after work.

Delahunty highlighted the need for a coordinated approach between the three pillars of retirement income—superannuation, the age pension, and private savings—to ensure all Australians have access to adequate and sustainable retirement income.

ASFA advocates for a government-led process involving a wide range of stakeholders, including government, non-government, and sector representatives.

ASFA to Oppose Super for Housing

ASFA also announced its opposition to the Coalition’s “super for housing” proposal, arguing it doesn’t address the core issue of housing supply.

The proposal allows homebuyers to withdraw up to 40 percent of their super to buy their first home.

ASFA’s research suggests it would only benefit higher-income earners and potentially drive up house prices.

“The evidence is overwhelming that this will not help with building houses,” said Delahunty.

However, Coalition leader Peter Dutton argues that if people had been allowed to access their superannuation 10 years ago, young Australians today would better positioned financially, helping them into housing, boosting their retirement, and growing their super.