On 10 February 2021, people from across Australia joined specialised thought leaders as they discussed the future of superannuation.
ASFA, the Association of Superannuation Funds of Australia, organised a thought-provoking two-day conference, promoting discussion around Australian superannuation and effective utilisation strategies in fund allocation.
The conference comes in the unique broader context of the COVID-19 pandemic, which led to the creation of special relief legislation, leading to many requests by consumers to attain early access to their superannuation funds for increased financial sustainability.
In late-2020, the ATO announced that those that had been “adversely financially affected by COVID-19” could apply for preliminary access to their funds, in a bid to promote financial stability.
More than 360 000 Australians proceeded to request early access to their super under this scheme, applying to tap into their retirement savings for temporary financial stability. However, many, without knowing the benefits of this opportunity, did not take advantage of the ATO’s offering.
It is no surprise that many in the community – particularly younger adults – are unfamiliar with some of the finer details around superannuation.
When people researched whether they could / should gain early access to their super funds in light of covid-19 restrictions, they were met with an array of answers, most often not from super funds themselves.
Several search returns suggested that withdrawing retirement income prior to reaching the age of 60 would result in the imposition of taxes – a result most working families cannot afford.
This led to many hesitating to access funds, which Australians start contributing towards from when they begin their employment.
Families across NSW, Victoria and other states and territories in Australia had hoped to make use of their Australian super through servicing their assets or investing in real estate.
Adam Fraser, Director of EY Consulting with over 25 years’ experience, spoke about the seemingly increasing disconnect between the masses and super funds. “Instead of relying on super funds for answers, members relied on web searches and social media forums”.
Scott Glover, an EY Partner (Financial Services Strategy) based in Melbourne, made a similar observation, “this disconnect between members and their funds is pervasive”.
The relationship between stakeholders and fund managers has been a sketchy one, appearing to be a recurring problem not just in Australia but in the USA, New Zealand and across the Asia Pacific nations.
Moreover, it seems that ordinary Australians have limited access to discussions between regulators on fund allocation, risk management and consultancy in the financial services industry, which poses as a barrier to investment objectives’ realisation and investment management.
The conference asked the question of what can be done to alter this disconnect in financial between stakeholders in the broader economy and their funds.
Our Sydney-based Managing Director, Talal Yassine, shared some of the ways Crescent Wealth Super aims to bridge this gap in the superannuation industry. “In reality, when we talk about member engagement, and how we talk to people and how we deal with our customers, that was never a strategy or an idea that changed from year to year”.
“We were born and exist only because of our members and for our members.”
Talal Yassine encouraged super funds and service providers to connect with their members and build healthy platforms for seeking financial advice and enrich consultancy around superannuation.
Deloitte, in a blog post shared earlier last-year, argued that Australians should not need to access their super fund allocations in order to survive the pandemic.
“It will be the younger among us, along with those already on low incomes, who would be most expected to access their super in the year or two ahead, as they are far less likely to have access to other savings”
For a person who is say, 35, who loses their job in the coming weeks, that $10,000 today will be worth just over $65,000 when they eventually retire in another 35 years”.
Susan Thorp, professor of finance at the University of Sydney, wrote, “People earning less, (un or underemployed) automatically accumulate less superannuation. If stock and bond prices fall, the savings invested in those assets will also shrink.”
Early access to retirement funds can prove useful to many families, but must be considered in the greater scheme of inflation and overall benefit post-retirement.
Both stakeholders and fund managers, however, can improve their relationship with increased communication to clarify the pros and cons of matters pertaining to Australian super.
For more information regarding the use of Super during the pandemic, our members can visit the ASIC website.
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