Superannuation Landscape: Regulation, Sustainability, and Market Shifts
The Australian superannuation sector faces intense regulatory scrutiny this week as ASIC and APRA flex their enforcement muscles across superannuation and advice. Meanwhile, significant industry consolidation continues with another merger announcement, alongside notable developments in retirement product ratings and sustainability governance. These developments unfold against a backdrop of heightened focus on superannuation payment reforms and mounting pressure on fund trustees to demonstrate competence and compliance.
Product Innovation & Market Movements
In a market-first development, Chant West has become the pioneering research house to launch ratings for lifetime income products, addressing a critical gap in the retirement product evaluation landscape. This initiative responds to the growing demand for structured retirement income solutions and may accelerate innovation in this segment.
Meanwhile, industry consolidation continues, with CareSuper and the Meat Industry Employees' Superannuation Fund (MIESF) confirming merger plans and creating a combined entity with enhanced scale benefits. The trend toward "bigger is better" persists as funds seek operational efficiencies and improved member outcomes.
FNZ has secured a significant mandate on the wealth technology front and appointed a new APAC head, strengthening its position in the platform provider space. Concurrently, Iress has bolstered its capabilities by hiring wealth technology experts and signalling intensified competition in the financial technology space. Finally, HeirWealth announced it is launching an integration with Class Super, improving efficiency for advisers working with SMSF clients.
Product sophistication continues to evolve with REST Super initiating in-house global equities trading capabilities, a strategic move that could deliver cost savings and enhanced investment flexibility for members. This trend towards internalisation represents a significant shift in how super funds approach investment management.
Client Needs & Research
Global retirement security concerns are mounting, with new research from Amundi confirming an international retirement savings crisis. The findings highlight shortfalls in retirement adequacy affecting both developed and emerging economies, reinforcing the importance of proactive policy interventions.
Alternative assets continue gaining traction in portfolio construction, with industry experts highlighting the strategic importance of effective alternative investment deployment to enhance diversification and returns in the current market environment.
Research into demographic disparities shows that early superannuation engagement significantly boosts women's retirement savings, emphasising the importance of targeted education and intervention strategies. Meanwhile, industry funds are directing more research efforts against using superannuation for housing, intensifying the debate around retirement savings versus current housing affordability needs.
Regulatory Landscape
The regulatory environment continues to tighten with the Treasury releasing draft payday superannuation legislation that includes substantial 60% employer penalties for non-compliance. This reform aims to address contribution timing issues and protect employee entitlements.
ASIC has dramatically increased enforcement activities, initiating legal proceedings against AustralianSuper and targeting financial advisers providing poor superannuation advice through its Financial Services and Credit Panel. Additionally, the regulator has secured a significant $10.5 million penalty against Active Super for greenwashing, its third successful court action targeting misleading sustainability claims.
APRA's regulatory reach has expanded with the regulator now empowered to remove superannuation directors and successfully imposing varied licence conditions on BUSSQ following governance concerns.
The dispute resolution landscape is evolving. AFCA announced a 3.5% fee increase for FY25-26 and opened consultations on financial elder abuse and family violence guidelines, signalling an enhanced focus on vulnerable member protection.
Industry Movements
Personnel changes continue to reshape the sector, with ART (Australian Retirement Trust) appointing a new insurance chief and highlighting the strategic importance of insurance offerings within super funds.
Looking Ahead
Actions for the Superannuation Industry:
In light of the increased regulatory scrutiny, industry consolidation, and evolving member needs, superannuation funds should prioritise the following actions:
Enhance focus on governance and compliance: APRA and ASIC are increasing their enforcement activities, signalling a need for funds to strengthen their governance frameworks and ensure full compliance with all regulations. This includes ensuring board members possess the necessary expertise, maintaining robust risk management practices, and preparing for upcoming regulatory changes such as the Tranche 2 anti-hawking and deferred sales model reforms.
Prioritise member outcomes and engagement: Funds must address the growing concerns around retirement adequacy and gender disparities in retirement confidence. This can be achieved through:
- Developing innovative retirement income products and solutions.
- Providing personalised advice and financial wellness programs.
- Leveraging technology to enhance member experience and engagement.
- Focusing on financial literacy and targeted interventions to improve women's retirement outcomes.
Future Events and Considerations:
The superannuation industry operates within a dynamic environment. To navigate future challenges and opportunities, the industry should closely monitor and consider the following events:
Federal Budget 2025: The industry should pay close attention to potential superannuation policy changes that may arise in the Federal Budget, such as:
- Tax reforms impacting contributions, tax rates, and pension drawdown rates.
- Policy shifts related to retirement income and the age pension.
Federal Election 2025: With retirement system fixes identified as an election priority, the industry should:
- Assess the superannuation policies of major political parties.
- Consider voter sentiment and priorities regarding retirement savings and financial security.
