REFORMING THE RETIREMENT PHASE OF SUPER

ASFA CONFERENCE 2024

RECORDED REMARKS, 20 NOVEMBER

Thank you for having me back to speak today.

I’m sorry I can’t be there in person. I would have loved to have caught up with you in Sydney on Gadigal Land –

But I’m in Canberra today pushing to get super reforms we’ve worked so hard together on, through the Parliament.

I’d particularly like to thank Mary [Delahunty, ASFA CEO] and her team at ASFA for representing your views and the interests of ASFA members in her discussions with the Government.

Mary, we are very grateful for your leadership and I know that Stephen Jones is too.

Last time I addressed this conference was near the start of 2023. More than 18 months has passed since then – or half of this Government’s term.

Back then I spoke about the economic outlook and the immediate challenge that we faced in getting inflation down.

Now, that challenge is still with us but we’ve made some really substantial progress since then, more than halving inflation, while also managing the risks to growth and preserving the gains we’d made in the labour market.

Real wages are growing again and more than a million new jobs have been created since we came to office, despite a soft economy.

We’ve also made significant progress on our superannuation agenda.

We’ve been working hard to safeguard super, strengthen it, and help more Australians have a secure and dignified retirement.

The superannuation guarantee has increased from 10 to 11.5 per cent.

For the average worker, this means around $64,000 more super at retirement.

We also just passed legislation to pay super on government-funded Paid Parental Leave.

That will help around 180,000 Australian families each year.

We’re making progress on payday super, lifting retirement incomes for millions of Australians from the middle of 2026.

And we’re working hard to secure support for two key pieces of legislation in the Senate right now.

The first, to enshrine the objective of superannuation into law: “to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.”

As I said last year, this is not about changing the objective but elevating it into law with an emphasis on preservation.

And the second, to better target super concessions for balances above $3 million.

Those with more will still get very generous tax concessions, but slightly less generous.

Many of you in this room made meaningful contributions to these proposals and we thank you for your input.

This is already a significant and substantial agenda.

But I didn’t want to let the opportunity pass today in a room full of people who care so deeply about a dignified retirement for your members to talk about the next stage of our reforms focused on the retirement phase of superannuation.

The superannuation system is reaching a pivotal moment.

Within the next decade, over 2.5 million Australians are expected to retire.

Within two decades, most people retiring will have been accumulating superannuation at 9 per cent or more annually for the duration of their working lives.

Over the next four decades, drawdowns from super are estimated to increase from 2.4 per cent of GDP to 5.6 per cent of GDP.

This is part of the big demographic shifts shaping our economy, identified in the Intergenerational Report.

As our economy changes, population ages and the super system evolves, more and more Australians will draw down on bigger pools of savings, that they will rely on for longer.

We are working to ensure there is as much of a policy and product focus on the retirement phase as there is on the accumulation phase.

Today 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. 

These changes will empower more Australians to make the most of their superannuation through more trusted information, better products and greater transparency. 

We are focusing on four key areas to strengthen retirement outcomes.

One, we are enhancing independent guidance.

Expanding and refreshing resources on the Moneysmart website so retirees have easy access to independent, reliable information on retirement options. 

Two, we are delivering better retirement products.

We are improving the innovative income stream regulations and supporting more innovation in retirement products.

These changes will allow funds to offer product features that members want, such as money back guarantees and instalment payments instead of an upfront lump sum.

This will give members more options that meet their needs and help them make the most of their super. 

Three, we are establishing best practice and voluntary principles on retirement products.

These principles will guide the superannuation industry in designing modern, high-quality retirement products that support Australians’ financial security in retirement. 

And four, we are increasing transparency through a new reporting framework for retirement outcomes.

This will offer members greater transparency and create common understanding for success in the retirement phase.

The new Retirement Reporting Framework will commence from 2027 and help monitor outcomes for members in retirement in a consistent and transparent way.

We have also tasked APRA and ASIC with a Pulse Check report by the end of 2025.

This will track trustees’ progress implementing their strategies to meet obligations under the Retirement Income Covenant.

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.

Surely even our political opponents, who have been trying to undermine and diminish compulsory super whenever they can for partisan reasons, will see these changes as practical, pragmatic, and sensible and support them. We’ll see.

In the meantime, thank you again to Mary and ASFA and all from the super industry who already contributed to the initial consultation that has led to these reforms.

And I acknowledge ASFA’s ongoing work in considering how to best bring together the different strands of retirement income.

What all of you in this room have achieved in building the superannuation system is incredible.

It is a great strength of the Australian economy and a great source of security for Australians, building wealth and well-being in retirement.

But we still have work to do together. We need your feedback, your advice and your expertise as we refine this package.

We have a goal, shared by everyone in this room, to ensure super delivers on its foundational promise of providing a dignified retirement for more Australians.  

Stephen and I are looking forward to working with all of you on this.

Thank you for giving me the chance to announce these reforms with you today, and enjoy the rest of the conference.