Super benefit statements would raise engagement:industry

It’s the carrot without the stick.

One of Australia’s biggest financial industry associations has declared its support for the principles set out in the Australian Securities and Investments Commission’s consultation paper, Superannuation Forecasts.

Richard Gilbert, the chief executive officer of the Investment and Financial Services Association, has declared his support, for the principles spelt out in that paper.

He said end benefit estimates are the best way to capture the attention of superannuation fund members.

The commission wants to develop simple snapshots of those benefits, so that super fund members know what they are likely to get, on retirement.

Mr Gilbert is supporting that idea, enthusiastically.

“If implemented correctly, estimates will help Australians to see how their current super savings are tracking,” Gilbert said.

“Ultimately, these estimates will will help boost the levels of engagement in super,” he added.

He warned, though, that the proposal would need to be managed carefully.

His association set out seven principles.

1. Gilbert said end benefit estimates are different from online calculations The regulatory approach would need to recognise that.
2. The statements should be used only as an educational tool.
3. The system should recognise members’ concerns about liability.
4. Standardised assumptions are crucial
5. All end benefits should be represented in today’s dollars
6. The assumptions used in the calculations should not change too often and
7. Specific and consistent disclosures are required.