Adequacy benchmark to help define super
Wednesday, 16 March 2016 12:58pm

Australian Institute of Superannuation Trustees (AIST) chief executive Tom Garcia believes one of the keys in defining super's purpose will be including an adequacy benchmark.

Garcia admits an adequacy benchmark will be "devilishly hard to define" but it will help to address fallacious and confusing messages among all of super's participants, from retirees to industry professionals.

He said myths about what people need to save before retiring are sending the wrong message to many Australians who fear failure should they not reach these touted high savings numbers.

"What sort of industry tells its customers that they have failed?" Garcia said.

Opening the 2016 Conference of Major Superannuation Funds in Adelaide today, Garcia told more than 1000 delegates the industry needs to do much better "at helping retirees understand how super works with the age pension to provide retirement income."

He said mounting speculation about quick fix super changes in the federal budget leaves the AIST disappointed.

"There can be no debate that some reform is needed, but we do not support short-sighted policy changes to plug budget holes. The way super is currently taxed is unfair to low and middle income earners. AIST - like many others in the super industry - has done a lot of work that is evidence-based...on how to close this inequity gap in super," Garcia said.

"If super tax changes are indeed announced in the upcoming budget and they fail to pass the fairness test, super will - and should become - a significant election issue, if it isn't already."

Federal Assistant Treasurer Kelly O'Dwyer followed Garcia's speech by video and said the government was committed to "getting superannuation right."

On super fund governance, Garcia said the AIST will be contributing to an industry-wide governance code - a likely outcome of the Fraser Review. He said the code will build on the AIST's Fund Governance Framework for Not-for-Profit Superannuation Funds that was first published in 2011 and is now in its third edition.

"We will also draw on examples on best practice thinking from other sectors and jurisdictions, including the ASX Principles of Corporate Governance which operate on a "comply or explain" basis," Garcia said.

"The success of the ASX principles is partly attributable to their recognition that a one-size-fits-all governance approach is not appropriate. Our code will also recognise this. A new governance code is not a tick-the-box exercise."

O'Dwyer said the government is committed to delivering enforceable governance reforms.

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