“The numbers don’t add up!” was the message Stephen Jones MP, Assistant Treasurer and Minister for Financial Service, drove home several times at the Conexus Financial Quality of Advice Review breakfast in Melbourne last week, referring to the 16,000 financial advisers and 5 million Australians in or approaching retirement.
There is a crisis in Australians getting access to retirement income advice. That has to be a priority.“
– The Hon Stephen Jones MP, Assistant Treasurer and Minister for Financial Services
Better retirement outcomes
While Jones didn’t provide any definitive answers about how the gap could be narrowed and financial advice made more accessible to all Australians, we can expect superannuation funds to be part of the solution. He echoed Michelle Levy’s QAR Report, acknowledging that superannuation is complex and people “will have better retirement outcomes if they make good decisions in their own interests throughout their working lives and then into retirement”.
Jones indicated that he favours ‘nudges’ and other techniques for helping superannuation fund members achieve better outcomes. He cited the example of the large numbers of retired members still in accumulation products. If they moved their superannuation balance into a pension product such as an account-based pension, the tax on income earned by this balance would fall from 15% to 0%.
A word of warning to trustees before they act on this suggestion—ask your legal or compliance teams about the anti-hawking regime.
The role of superannuation funds
When asked whether the same rules about guidance and advice would apply to all financial services institutions, Jones noted that superannuation fund trustees have a whole range of obligations and covenants under the SIS Act that banks don’t, including the obligation to act in the best financial interest of members.
Jones pointed out the challenge for trustees in implementing the Retirement Income Covenant, which requires trustees to assist their members in meeting the objectives set out in the covenant. However, it is difficult for trustees to provide that assistance without providing financial advice.
“You’ve got a statutory obligation to do something which another part of the law makes it almost impossible for you to do, so that needs urgent attention,” he said.
Stephen Jones acknowledged a crisis in Australians getting access to retirement income advice. He repeated more than once that “in protecting Australians from bad financial advice, we’ve also protected them from good financial advice.”
Better access to information and advice
It is evident that Jones is keen to see Australians have access to information and advice that will help them use their retirement funds to enhance their living standards and provide them with the best retirement possible. A goal that Optimum Pensions wholeheartedly shares and supports.